We have seen a convergence after years of cheap money, lots of liquidity, and companies pilling on  debt loads that is now converging with a bankruptcy predictor called the “Z Score”.  This is creating a blinking yellow light according to legendary bankruptcy expert Dr. Edward Altman. As these two interlocked factors start to create warnings a third element is drifting into the not so distant future.  An Article in the WSJ June 26, 2017, “The $1.5 Trillion Business Change Flying Under the Radar”.  Congress is kicking around scrapping the interest deduction for businesses.  This would increase the after tax cost of interest an additional 35% and may in fact put many highly leveraged deals in covenant default, to negative cash flows.  The economic disruption would be gigantic. With congress just thinking in those terms should send [...]

“lenders on the panel do not wait until month end for the AR aging, and none would lend to a company unable to provide aged AR almost instantaneously” As we look to how technology continues to change the world around us and how we conduct business, Fintech represents a new era of real time analytics and 24x7 exception reporting. I recently attended a panel discussion on current uses of Fintech in commercial lending and was struck by the differences in use between the application of Fintech in the North versus the South. With east coast offices in the North and the South it continues to amaze me at the divergence in these markets.  In the Northeast, factors are scarce and second tier lenders are in the minority versus the South that has [...]

Many companies face challenges during their economic life cycle and must reconstitute themselves to stay abreast with technology and markets.  All too often we see companies that fail to change and disappear.  Developing new products and markets bring on new and different challenges to a company’s existence.  Some of these challenges create obstacles not encountered before.     Capital Restoration can help avoid the obstacles and smooth the waters assisting the team in avoiding a killer storm. Case Study: Your longtime client / customer has been profitable for years but is concerned they will run out of cash as they strategically look to move into new markets.  How this plays out can determine if you have a CEO opportunity or a customer for another decade.   (CEO = career ending opportunity). This [...]

Recent economic data released by Japan, China and the US  creates an interesting paradigm. For me the real question is how these challenges impact our clients, customers and us directly. The recent economic data is not necessarily bad news but interesting.  The data is presented to create meaningful thought on how this data can impact you and those you service. Specifically we will look at Japan’s mild recession, China’s fight to keep its economy moving, and some insights into the US market. Inventories decline in Japan creating negative economic results, China continues to struggle with over expansion and declining growth, and  some yellow lights blinking on the US economy. Japan's Economy slips into recession Yet the contraction was relatively mild, and a decline in inventories was the biggest factor. Japanese government officials [...]

The latest Federal Reserve speak provided some input into just when the Fed will start to raise rates and by how much. Winter Havoc / Liquidity / Interest Rates The latest Federal Reserve speak provided some input into just when the Fed will start to raise rates and by how much. We all agree a June increase of ¼ point is likely but what happens from there is the real puzzle. It appears the Fed has laid out a solution to the puzzle but it is in sand not cement. I had started to think about a blog on the subject when an opportunity to hear Karen Gilmore, Regional Executive of the Federal Reserve Bank [Atlanta] occurred. Her presentation helped clarify the information. Her personal comments were confirmed by the economic data released today, March 25, [...]

Capitalism is a little like a seesaw. There are winners and losers and it continually moves back and forth. Nothing can go up forever nor can they go down forever. It is my opinion that for the last several years we have been living in a benign economic environment. The seesaw has not been moving.    My friends in lending tell me that they are having a difficult time lending money, yet the Fed has made the economy awash in cash. My investment banking friends tell me deal flow is slow. My own experience in this area leads me to the same conclusion. We have looked at several deals under our new PE firm www.westondelray.com and deals do not get past the initial due diligence. All this said [...]