As I’m writing this, Congress and President Joe Biden are wrestling over the nation’s debt limit. Regardless of how that fight plays out by the time you read this, the battle is yet another unwelcome shock to the world economy — one of a plethora of macroeconomic hits that keep coming.
We may not officially be in a recession, but it’s understandable if all this uncertainty makes a business owner jittery. At times like this, it’s important to remember that challenging economic environments are often ripe with potential.
One way to leverage that potential is by making bold moves when others might sit on the sidelines. An experienced financial partner can help management teams execute bold moves with confidence. Here are some ways to leverage a financial partner.
- Become an acquirer. Slowdowns can mean a chance to acquire a rival or even multiple rivals. This can be a speedier way to obtain new capabilities and market share.
- Focus on growth. It may sound counterintuitive, but times of uncertainty can offer lots of chances to either grow immediately or prepare for an inevitable change in market conditions. Companies with capital can keep a foot on the accelerator with respect to research and development, and expanding reach. With ongoing tightness in the labor market, capturing the best talent is another wonderful way to position your company for success.
- Tap into outside talent and resources. The right financial partner can bring operational expertise, help access new markets and invest in technology and automation to drive growth and overcome market challenges.
To be sure, there is a lot to consider before making any move — even if that move is maintaining the present course. Even if your move is maintaining the status quo, it is important to run through the options.
- Selling outright. Valuations are down from the market peak 12 to 18 months back, but good companies continue to secure strong valuations. Even in today’s market, you might be surprised at how well your company is valued. This is because strategic buyers are still focused on gaining market share and financial buyers have hundreds of billions of dollars allocated to invest in privately held companies, which they need to put to work regardless of market conditions.
- Finding a minority partner. You don’t need to relinquish control of your business to bring on critical capital. Many firms offer minority partnerships that deliver a lot of the benefits, like partial liquidity along with significant expertise, while you retain control.
- Procuring flexible capital. It’s no secret that rates are way up, and banks are tightening their credit requirements. This can make flexible financing solutions from alternative sources a much more efficient and effective way to secure critical capital, whether you’re looking to fund growth or using it for acquisitions.
Every business and circumstance is different, so it’s important to work with a partner who understands your industry and works with you to achieve your goals. Business owners have lots of options, whether that means just weathering the storm or making bold moves together with a strategic growth partner to grow during what could otherwise be challenging times for most companies. ●
Cheryl Strom is an Origination Partner at The Riverside Company
