Reliability of corporate finance firms
The role of corporate finance involves making capital investment decisions which are based on capital budgeting. This involves an analysis of future capital expenditure, forecasting the cash flow and deciding on the optimum allocation of the budget.
Ease of corporate financing
Corporate finance has the responsibility of raising funds in the form of debt or equity. This can be done by borrowing from commercial banks or issuing debt instruments via investment banks. Another option is to choose the equity route through an IPO. Since these decisions can have far-reaching business implications, corporate finance has to be handled effectively by a strong team of professionals.
Small medium and micro enterprises seldom have the luxury of hiring a full-time finance department as it can be quite expensive. In situations like these corporate finance firms come to the rescue. They can help these companies navigate corporate finance challenges and raise funds comfortably for them.
Corporate finance firms provide the following services
Advisory services for raising debt for working capital and term loans.Advisory for project finance execution and structured finance. Raising finance for projects, trade and working capital from banks and NBFCs, assistance in structuring debt Advisory for credit rating Capital market services for the issue of equity, non - convertible debentures and commercial paper aid in liaisoning with private equity and venture capital financing. Corporate finance firms help small companies raise funds through the debt or equity route depending on their individual needs. In the case of equity, they offer them various options like going for an IPO, selling a stake, entering into a joint venture, or raising funds through private equity or from venture capitalists.
Low barrier of entry for corporate finance
Another option for both new companies and existing companies is to go down the debt route for financing growth and development. Getting debt financing involves coordination with banks to negotiate the interest rate, working out the collateral security and organising personal guarantees. Debt financing becomes easier when the company has a good credit rating. Corporate finance firms help to identify the right rating agency, liaison with them for documentation and assist in obtaining a decent rating. Similarly, when it comes to debt financing for new companies they help in working out the commercial viability of the greenfield project, preparation of the project report and liaisoning with the banks for attractive interest rates.
SMEs find it very convenient to opt for a corporate finance firm for their funding needs. They can assess the capital requirements of the company and help them create a funding plan. Once the debt-equity mix is decided, the firm helps in getting the paperwork ready and coordinating with the agencies involved.
A smarter choice
Hiring a corporate finance firm to handle the fundraising activity can be a very beneficial decision for small companies as it lets them focus on normal business operations while the legwork is handled by professionals. Corporate finance firms combine deep financial expertise with business tools to create maximum value for the client. They support the CFO by helping them with the capital market analysis to determine which strategies can create maximum business value.
Working out the right balance between debt and equity is key to a conservative approach as a growing company has to make sure it is not overleveraged. A corporate finance firm will help the company work out its financial position and arrive at the right strategy keeping in mind the future growth plans.
Corporate finance firms have a strong network of banks, NBFCs and rating agencies that help them generate excellent outcomes for their clients. They have talent pools of finance professionals who have diverse backgrounds with expertise in investment banking, corporate finance and audit which help them provide 360-degree advisory services to clients including drafting the business strategy, funding and compliances.
Corporate finance firms can help small companies by being their growth partner and helping them lay out a financially prudent capital structure that ensures that the quality of credit is high and due diligence requirements are adhered to. They help clients in raising funds and laying out investment strategies for growth maximization in future. They undertake thorough analysis and screening processes before advising on fundraising.
Today’s corporate financing
In today’s fast-paced business landscape that is highly dependent on technology, it becomes critical for small and mid-sized companies to hire a reliable corporate finance firm to manage their corporate finance needs. They need a trustworthy partner who can assist them in navigating corporate finance challenges and creating a stable capital structure that can fuel their future ambitions.