Investment Banking

Capital Sourcing

Our turnaround advisors assist clients with a variety of capital needs. Our Firm has a reputation in the lending community for creating innovative financial structures to help close transactions. We have a proven track record of helping our clients obtain needed capital, whether it’s refinancing an established company or obtaining equity to take advantage of a new opportunity.

  1. Senior Debt - Through extensive relationships with lenders, Warren Averett provides our clients with a variety of solutions to their funding needs. Secured debt facilities include revolving accounts receivable and inventory lines of credit, term loans, purchase order financing, contract financing, equipment financing, real estate and equipment sale-leaseback transactions, real estate financing and bridge financing.
  2. Subordinated Debt Growth - Capital for middle market companies often takes the form of subordinated debt. We have developed relationships with subordinated debt sources active in middle market financing. Given the ever-changing criteria and funding capabilities of these firms, Warren Averett maintains extensive databases to facilitate locating the appropriate capital source based upon our clients’ industries and capital requirements. Our turnaround advisors assists companies in identifying, structuring and closing the transaction that best fits the needs of the business.
  3. Equity - We work with institutional equity funds and broker-dealers in equity placement transactions. Our investor relationships target primarily distressed situations.

Business Valuation

For companies operating in distress, there may be a substantial disconnect between book value under U.S. generally accepted accounting principles and “true market value.” Depending on the company, this may be evident, not just in the book value of the total enterprise’s equity, but also in the book value of its various assets as disclosed on its most recent balance sheet.

Also, distressed valuation analysis generally requires a better understanding of the dynamics surrounding bankruptcy. Additional metrics that must be applied include a liquidation analysis, “normalized” cash flow projections and the valuation of a company’s tax attributes. Experienced investors in the distressed arena, who combine these techniques, can make a far more informed decision about the outlook for investing long, or short, in the various securities of distressed entities.

Each valuation engagement is unique and requires a customized approach. We use the foundation of basic valuation principles, as well as the latest developments in financial theory, to accurately determine fair market value. This expertise allows us to select valuation methods that best reflect the special characteristics of each client. Warren Averett is experienced in business valuations in a variety of industries and provides clients with a range of distressed valuation services, including stand-alone going concern determination, pro forma “As Combined” entity value and liquidation value.

Buy Side and Sell-Side M&A Services

Warren Averett can specifically assist in the sale or acquisition of a distressed business. Selling or acquiring a distressed business is a precise exercise that can be accomplished, but it takes experience and practice. Timing is everything. Distressed businesses face the same basic challenges: they are running out of cash, the going-concern value of the business is at risk of a precipitous decline in the absence of significant liquidity injections, and they are unable to implement an effective capital and operating restructuring plan.

Warren Averett provides critical and timely advice to all classes of stakeholders in distressed M&A transactions. Our team benefits from a harmonized combination of traditional M&A skills, together with debt and equity financing expertise, in the distressed arena and an intimate knowledge of distressed sales and realization processes. Warren Averett deploys a specialized skill set, combining insolvency and restructuring knowledge with experience acquired in healthy M&A processes, to run a seamless distressed M&A transaction from start to finish.

Warren Averett can advise the distressed company on:

  • creditor, supplier and customer negotiations, including developing and negotiating appropriate forbearance
  • credit amendment and sale structures and strategies
  • sourcing, negotiating and documenting interim and permanent financing solutions
  • distressed M&A advice including

    • assisting in developing and implementing sales processes, negotiating LOI's and definitive agreements of purchase and sale
    • facilitating due diligence
    • managing the stakeholders

Warrant Averett can advise acquirers on:

  • alternative acquisition structures and strategies
  • preparing and negotiating LOI's and definitive agreements of purchase and sale
  • undertaking due diligence
  • managing key stakeholder relationships with the distressed company and its important secured and unsecured creditor constituencies, key suppliers, customers and employees

Warren Averett can advise secured creditors on:

  • developing and negotiating appropriate forbearance, credit amendment and sale structures and strategies and actively participating in the process
  • maximizing their recovery and preserving collateral values

Section 363 Sales

In certain situations, the sale of a company is best completed under the direction of the Bankruptcy Court (Section 363 sale). This type of sale offers the buyer the assets free and clear of any liens or encumbrances. Given the current economic climate and depending on the facts and circumstances, it may be more advantageous to pursue a sale of assets outside of Bankruptcy Court. Besides the use of the 363 sale, other options are available for distressed companies that seek to sell and/or liquidate, including assignment for the benefit of creditors and the establishment of a receivership. Our experience in working with troubled companies gives us the expertise necessary to guide a company (or its lender/investor) through the complexities of each of these alternatives to maximize the recovery for all stakeholders.

Due diligence

When acquiring a company, particularly a troubled company, the importance of proper due diligence cannot be overemphasized. Due diligence is critical in uncovering the true condition of the target, instead of merely relying on the seller’s representations and assumptions. Our professionals have experience in arriving at the true facts of a situation without placing undue reliance on representations.

While restricting due diligence could limit costs and expedite a transaction, it may be financially disastrous in the long run. Easily verifiable items may make a company that appears sound on paper unsound in practice. Moreover, should litigation be required, reliance on purchase contracts alone is not sufficient. Although the buyer might be able to recover some financial losses from the seller under a well-drafted purchase contract, this recovery is subject to significant obstacles. Any such recovery presupposes that the seller has adequate financial capacity to cover the initial loss. Additionally, any recovery is subjected to the normal costs and delays associated with litigation.

By gaining an early understanding of issues and problems through proper due diligence, the parties may arrive at creative solutions that enhance the likelihood of success. Proper due diligence involves identifying the deal’s fatal flaws, gathering information regarding the reasonableness of the transaction, and identifying areas that require management’s attention both before and after the acquisition.

Although to some extent every deal is predicated on representations by the seller for such things as the current performance of the target and its future prospects, the unavoidable gap between the seller’s and the buyer’s familiarity with the target should be made as narrow as is economically feasible. Our experience working with troubled companies, coupled with audit and tax proficiency, can help a buyer close that gap.