Is credit starting to flow?

In the latest McKinsey Quarterly (see link), companies from around the globe are reporting that they are seeking external funds and this demand has increased significantly from previous surveys.

From our own experience we are seeing a strong demand for equity rather than debt.  The benefits of equity are that you don't have to pay it back, and from growing and emerging companies they can then leverage the eqity to obtain debt finance.  Credit still seems to be a problem in Australia and we are seeing a particular shortage for property developments.

We are also seeing a range of off-shore funders willing to invest in both ASX listed companies and public unlisted companies.  Some of the funding models are quite innovative and are relatively simple to procure.

Funding Strategies - Small Scale Offers

ASSOB ( www.assob.com.au) is the largest and most successful platform for showcasing investment opportunities in high-growth, unlisted Australian companies. The ASSOB platform supports companies from all sectors including mining, green technologies, energy, food & beverage, biotech, software / web / tech, finance, medical and many others. As a result of our association with ASSOB we can now facilitate capital raising listings for our clients onto ASSOB of between $500K and $2M+.

Companies wanting to list a capital raising offer (eg Offer Docs, IM, Prospectus etc) on ASSOB must first engage the services of an Accredited ASSOB Sponsor. Due to our ASSOB Accreditation we are pleased to now be in a position to offer the following additional services to our clients:

Assist companies with their ASSOB listing application;
Assist companies structure their ASSOB capital raising offer;
Assist companies prepare their ASSOB capital raising documentation;
Assist companies market their ASSOB capital raising offer;
Assist companies negotiate with potential investors;
Assist companies administer their ASSOB capital raising offer to ensure compliance;
Assist shareholders in unlisted companies to potentially exit their share-holdings via the ASSOB Secondary Sales functionality;
Assist advanced / profitable companies undertake an "ASSOB Compliance Listing” so existing shareholders can access the ASSOB Secondary Sales functionality.

“ASSOB is now one of the largest introducers of private investment to early-stage, high-growth companies through its network of accredited Sponsors and works within and relies upon the regulatory environment imposed by the Australian Securities and Investments Commission (ASIC) and the Corporations Act 2001.”

 Contact us so we can prepare a draft Captial Raising Scenario for your business.

The economy seems to be turning

The US economy seems to be declining significantly less according to the Washington Post - see graph of Qtrly domestic product output (Aug 09). Stockmarkets also seem to be in a more positive mood and there seems to be more activity - companies are starting to hire and from my own activity and discussions in the market things seem to be picking up. With my recent trips to Sydney, I would say that Brisbane is lagging Syd (and Mel). Hopefully we all see the up-swing soon.

The Return of the Salesman

I noticed this article from Harvard Business School (http://hbswk.hbs.edu/) regarding "The Return of the Salesman". This article triggered me thinking about my own recent experience. When calling on organisations that find themselves in need of assistance, rather than wanting strategic advice and coaching on how to move forward and executing on their strategic initiatives, many are looking for the "silver bullet" - the super sales person! They are looking for assistance to sell their products and services and hence improve revenue and bottom lines. Well networked and with executive level experience, I happen to fit the bill quite nicely. The issue then becomes one executing the appropriate sales and channel strategies and the details around branding, channels to market, compensation and delivery.
If you are thinking of going down this path, we can make sure your overall strategy business strategy is sound, while providing advice and operational capability on achieving your sales goals!

Avoiding Corporate Collapse

The recent feature article "Avoiding Corporate Collapse" [Company Director, Vol 25, No 03 April 09] highlights the issues Directors face when companies find themselves in trouble. One of the biggest issues Directors face is whether the company is trading insolvently. The consequences of trading inolvently can be devistating both to the company, creditors, staff and Directors. The AICD has lauched a new "mirosite" providing information on "Directing in Difficult Times". The general advice is to seek advice early and to deal with the issues. In another article "Insolvency up as more hit by tax bills" [AFR, p7, April 9-13], it was discussed that SMEs were at increased risk of insolvency in the current market and things were expecting to get worse".

In these difficult times it pays to have the right strategies and capabilities, and to be seeking appropriate advice.

Corporate Governance and Company Performance

The Australian Government has recently published a paper that reviews Corporate Governance compliance in relation to financial performance. Follow the link for the paper (http://www.treasury.gov.au/contentitem.asp?NavId=035&ContentID=1495). Essentially the paper confirms the general view that strong corporate governance leads to better financial returns. "Our results suggest that companies demonstrating greater compliance with the ASX Corporate Governance Principles outperform less compliant companies in each of these three financial areas" (of shareholder performance, operating performance and one year sales growth for the top 300 Australian listed companies.

In a paper published by Julie Hudson (UBS Investment Bank, 2008) "Coporate Governance and Capital Markets"; the connection is again confirmed. "Weak corporate governance is accompanied by an increased risk of potentially unwelcome surprises" and guides investors to avoid companies with weak governance in terms of portfolio selection.

In my own experience as a Board Director, I would have to agree with the research. Companies exhibiting stong Board Governance and adherence to Governance principles such as those published by the ASX or AICD were on whole better performing than those that were "less compliant".

Given the strong impirical and "personal practical" evidence I am an advocate of professional Board Governance.

Working Capital and "Going Concern" Issues

The poll that I have been running on Linkedin has indicated that the majority of respondents beleive that more than 20% of companies have working capital issues. I was quite surprised at the result. KPMG has released a paper on advice for companies and directors on assessing whether an organisation is a "going concern". Given the high level of anxiety around working capital issues, it is a must read for executives and Board Directors. See - http://kpmg.com.au/Portals/0/09FR-07.pdf

What percentage of current organisations have working capital problems?

I am interested in understanding the level of "distress" in the market with regard to managing working capital and other operational issues. Some of the symptoms are company not paying their creditors on time and banks being reticent to lend for working capital problems. How do management cope and manage such situations?

Corporate Transformation and Advisory Services

Mark Rainbird has extensive corporate transformation and advisory experience. With over 10 years of Board, operational transformation and restructuring experience Mark can help your management team (and Board) execute and provide much needed capacity and capability in difficult and demanding times.

Mark has recently assisted a Mackay based Mining Services organisation to cut $600K per month from operating costs as the decline in mining services revenue impacted the company. This successful transformation involved leading the change management agenda and building a strong capable team to move the business forward.

Other transformation experience includes:

Re-focused operations while undertaking due diligence, merger / acquisition activities and a scheme of arrangement, leading to solid revenue bookings (dramatically exceeding plan), new products being launched, a customer service focus and a stronger team.

Undertook a major transformation involving concerted change management to deliver a $7M turnaround in profit year-on-year within a complex technology services company. Implementation involved delivery of business “building blocks” together with alignment of people and strategy.

Worked closely with clients to provide improved service levels while implementing improved management frameworks and reporting to drive operating efficiencies (utilisation and grade-of-service).

Grew an innovative mining services company from $25 to $50M in three years, by combining technical problem solving and commercial acumen to deliver strong business outcomes. Management of the bottom line, developing new opportunities and overseeing manufacturing were key elements to the success.

Partnered with Caterpillar to drive a leadership position in providing a “mine-to-market” technology portfolio (hardware and software) to dramatically lower mining costs. Provided leadership and execution of global roll-out including marketing and alliance programs.

Re-established mining business at CGEY through building strong client relationships and bold propositions. An innovative “Mining for Profit” strategy provided a catalyst for client engagement and delivery of core business and technology assignments.