Non-traditional financing presents opportunities for mid-market companies
despite recent credit crunch according to investment bank
TORONTO, Nov. 6 /CNW/ - Ontario's manufacturers are too reliant on
traditional bank finance, this according to a report by Toronto investment
bank, ZED Financial Partners. The 20-page report, released today, entitled
Beyond Banks and Borders: A Forum on Non-Traditional Finance For Ontario
Manufacturers found provincial manufacturers to be unaware of non-traditional
financing and best practices for access. The research was based on a series of
roundtables and in-person interviews conducted earlier this year.
"Non-traditional financing" describes financial structures and
instruments that businesses can implement to grow, expand and transition.
Examples of non-traditional finance include asset-based and cash flow
financing, subordinated and mezzanine debt, convertible debentures, preferred
shares, quasi-equity and private equity. All of which compete with traditional
bank financing primarily because of greater specialization and more aggressive
use of their balance sheets.
"Ontario manufacturers acknowledged a high-reliance on traditional bank
financing," said Leon Raubenheimer, Managing Partner of ZED Financial
Partners. "They feel improved access to capital could have an immediate impact
on their businesses and in the communities they operate. They felt new capital
would allow them to invest and grow, enabling growth in jobs and the tax
base," he added.
Raubenheimer believes US financier remain interested in mid-market
transactions in Ontario and across the rest of the country among US private
equity and private debt partners, despite the recent tightening in the credit
"As we were set to release our findings, the US debt market experienced a
liquidity crisis so we went back out to various capital pools to understand
the impact," said Raubenheimer. "We found that there were definitely some
challenges facing larger transactions, but to date the mid-market, that is
transactions below $100 million, remain active," he added.
"Valuations have compressed slightly and the cost of borrowing has
increased slightly to match perceived risks, there is still significant
interest in Canada," said Raubenheimer.
Raubenheimer explains that the study is not intended to dismiss the
important roll of commercial banks, in fact he thinks the needs of most
businesses are well-served by traditional banking products and services.
"For most businesses bank financing is perfectly suitable," said
Raubenheimer. "It is in cases where businesses are growing and transitioning
that non-traditional financing comes into its own. When company's situations
don't fit traditional risk models, private equity and private debt sources
offer exceptional options."
To obtain a copy of the study visit www.zedfinancial.com
For further information:
For further information: Tim Foster, ZED Financial Partners,
firstname.lastname@example.org, (416) 861-0294