Working Capital
Optimising working capital enables businesses to enhance liquidity, improve cash flow management, and secure the financial flexibility needed to seize opportunities and navigate challenges.
Caldera Capital specialises in helping clients identify and implement effective working capital solutions, ensuring they have the right financial foundation to support their operational and strategic objectives. Our team provides ongoing support to maintain optimal working capital efficiency as the business evolves.
Working capital solutions for proactive businesses
Proactive businesses understand that effective working capital management is crucial for sustained growth and stability. Caldera Capital specialises in providing tailored working capital solutions that address these specific needs, helping businesses navigate the complexities of working capital management to achieve their financial objectives.
Comprehensive execution across working capital solutions
Caldera Capital specialises in providing end-to-end execution support across a wide range of working capital solutions, ensuring our clients secure the optimal funding needed for their operational and growth objectives.
We offer long-term support, helping manage lender relationships, extend working capital facilities as needed, and maintain warm conversations with potential financing partners. Our goal is to ensure your business remains financially agile and resilient through effective negotiations and ongoing support.
Invoice financing
Convert outstanding invoices into immediate cash flow, improving liquidity and ensuring smooth operations.
Line of credit
Secure a flexible line of credit to cover short-term working capital needs and manage cash flow fluctuations.
Supply chain finance
Obtain financing to pay suppliers promptly, enhancing relationships and potentially securing early payment discounts.
Inventory financing
Use inventory as collateral to secure funding, helping maintain optimal stock levels without straining cash reserves.
Factoring
Sell accounts receivable to a third party at a discount, converting receivables into immediate working capital.
Short-term loans
Access quick, short-term financing to cover immediate working capital needs and support business continuity.
Term loans
Obtain traditional amortising loans to finance long-term working capital needs, with fixed repayment schedules.
Revenue financing
Raise capital based on future revenue projections, aligning repayment as a percentage of revenue with cash flow.
Mezzanine financing
Secure flexible, hybrid debt and equity capital to fund expansion or acquisitions.
Asset-based lending
Secure funding backed by company assets or new plant and equipment investments.
Debt refinancing
Optimise existing debt structures to improve terms, reduce costs, or extend maturities.
Bridge financing
Secure short-term funding to bridge between larger financing rounds or transactions.
Navigating the complex landscape of working capital management
Effective working capital management is crucial for maintaining business operations and enabling growth. Success in this area requires a strategic approach, including securing adequate funding, managing cash flow effectively, aligning deal structures and tenure with cash flow cycles, and continuous management and balancing of working capital.
The following key considerations serve as levers that can significantly impact the outcome of working capital solutions. The importance of each factor will vary based on the unique circumstances and objectives of each business.
- Receptivity of the market to the funding narrative at the chosen time.
- Alignment of industry trends, business momentum, and funding requirements.
- Impact of macroeconomic factors, geopolitical risks, cost of debt, and cash rate on lender appetite.
- Coordination of funding with strategic business initiatives and milestones.
- Potential for further business positioning to capitalise on favourable market conditions.
- Potential for short-term initiatives that could impact the funding and cash flow outcomes.
- Readiness of the business for lender scrutiny and market conditions scenario testing.
- Consideration of the regulatory environment and any potential changes that could impact the business, its cash flow or the transaction.
- Importance of a well-defined contingency plan to address potential changes in market conditions or lender sentiment during the transaction process.
- Strength and credibility of the narrative and transaction thesis.
- Completeness in presenting the business’s full potential to targeted lenders, including:
- Highlighting the key strengths of the business in a coherent way.
- Comprehensive mapping of growth opportunities across products, services, markets, and geographies.
- Clear articulation of the company’s long-term vision and the strategic initiatives required to achieve it.
- Identification of potential value creation levers, such as operational improvements, technology adoption, or strategic partnerships.
- Demonstration of the management team’s ability to execute the business strategy and adapt to changing market conditions—or if it will be augmented with new hires.
- Clear connection between various business and strategy and the business cash flow.
- Scalability of the business model and its potential for long-term growth.
- Consistency of financial performance and narrative with the working capital approach.
- Framing of the competitive landscape and the business’s positioning within the market.
- Alignment of the narrative with the company’s target markets and customer segments.
- Potential for strategic partnerships or synergies to enhance the financial story.
- Ability to articulate the key highlights of the working capital narrative while addressing the specific focus areas and deal structures of various lender groups.
- Robustness and reliability of financial projections, with specific emphasis on cash flow.
- Historical financial performance and how it supports the projected growth trajectory.
- Alignment of financial assumptions with overall business strategy.
- Assessment of various working capital options and determining the most strategic path forward.
- Suitability of the proposed working capital structure and process for the business.
- Clarity and feasibility of the use of funds and working capital cycle.
- Representation of future growth initiatives and their impact on financials and cash flow.
- Modelling of potential upsides and downsides in financial projections.
- Clarity and robustness of the cash flow management strategy to maintain sufficient liquidity and manage potential risks.
- Definition of key performance indicators (KPIs) and the plan for tracking and optimising.
- Clarity and soundness in the use of funds strategy to prioritise working capital deployment and manage financial resources for long-term growth and value creation.
- Fit between targeted lenders and the company’s business and growth strategy.
- Understanding the lending preferences, criteria, and specific solutions available through each lender group.
- Diversity and value-add potential of the lender base, if required, including the potential for strategic partnerships and synergies.
- Alignment of the pitch and lending proposition with the specific working capital type (e.g., line of credit, invoice financing) and the targeted lender group.
- Alignment of lender expectations with the company’s growth strategy and cash flow cycle.
- Suitability of targeted lenders for current and future funding needs.
- Plan for ongoing relations and communication to keep lenders informed and engaged, including the identification and nurturing of potential lenders for future funding needs.
- Ability to anticipate and address potential lender concerns or objections, as well managing the risk around key funding relationships.
- Preparedness for a rigorous lender due diligence process, including the ability to provide clear, accurate, and timely responses to lender queries and requests for additional information.
- Availability of a professional data room to securely manage data exchanges, maintain data integrity, and ensure smooth Q&A interactions throughout the due diligence process.
- Identification and mitigation of potential red flags or deal breakers.
- Negotiation of favourable deal terms, valuation, and structures.
- Alignment of the deal structure with the company’s growth strategy and exit objectives.
- Engagement of experienced advisors (legal and accounting) with relevant industry expertise and a track record of successful transactions to support the due diligence and deal execution process.
- Importance of aligning internal and external teams around the working capital strategy.
- Ability to maintain confidentiality and manage sensitive information throughout the due diligence and deal execution process.
- Clear and efficient internal decision-making process to facilitate timely and effective deal execution.
- Importance of having a well-defined communication protocol to ensure timely and effective information flow between the company, advisors, and potential lenders during the due diligence process.
- Alignment on the fact that securing working capital is just the first step.
- Alignment of the business and resources to execute the growth strategy, along with the agreed-upon use of funds.
- Establishment of clear performance milestones and metrics to track progress and demonstrate value creation to lenders post-transaction.
- Effectiveness of communication and reporting to lenders post-transaction.
- Strength of ongoing lender relationships and stakeholder communication.
- Strategic planning for future growth, additional funding opportunities, and liquidity options.
- Ability to adapt and refine the strategy based on market dynamics and feedback post-transaction, as well as cash flow fluctuations.
- Importance of having a robust risk management framework to identify, assess, and mitigate potential risks that may arise post-transaction.
- Robust corporate governance structure to ensure transparency, accountability, and effective decision-making post-transaction.
A continuous, evolving partnership
When approaching a significant transaction, the balance between speed and precision is crucial. Acting swiftly while maintaining a strategic approach enhances the likelihood of securing optimal terms, successful outcomes, and sustained success post-deal.
Strategy and planning
Develop a comprehensive strategy that aligns business objectives, stakeholders’ interests, and market opportunities, ensuring a clear path to success. This stage involves a careful assessment of market conditions, financial strategy, and target identification and analysis to set the foundation for a successful transaction.
Key considerations mentioned earlier are just a few of the many variables and levers our team evaluates during this phase.
Additionally, we identify “low-hanging fruits” and other strategic initiatives to maximise deal value and completion probability before going to market. (For detailed insights, read more here).
Time Estimate: on average 1 - 12 weeks
Business and deal preparation
Prepare the business for the transaction process by refining financials, crafting a compelling business case, and ensuring readiness for external scrutiny. This phase involves a meticulous understanding of every aspect of the business, identifying opportunities for improvement, and creating a robust information memorandum.
Key considerations mentioned earlier are just a few of the many variables and levers our team evaluates during this phase.
We take preparation to the next level by meticulously understanding every aspect of the business, identifying opportunities for improvement, and crafting a compelling information memorandum. (For detailed insights, read more here).
Time Estimate: on average 2 - 12 weeks
Going to market
Launch a targeted outreach campaign, leveraging our network and engaging with potential parties who align with the transaction thesis. Manage communications, addressing concerns and feedback while maintaining momentum. Further, we adapt the approach as needed based on market conditions and feedback.
Key considerations mentioned earlier are just a few of the many variables and levers our team evaluates during this phase.
We leave no stone unturned by meticulously mapping out the universe of potential targets and counterparties, and leveraging our extensive networks for relentless outreach. (For detailed insights, read more here).
Time Estimate: on average 2 - 24 weeks - dependent on market feedback
Transaction execution
Execute the transaction with diligence, facilitating a smooth due diligence process, structuring the deal, and negotiating favourable deal terms. Coordinate legal, financial, and regulatory aspects of the deal, ensuring alignment among all stakeholders. Plan for post-transaction integration and value creation initiatives to hit the ground running.
Key considerations mentioned earlier are just a few of the many variables and levers our team evaluates during this phase.
We apply global investment banking rigour combined with a hands-on boutique approach to ensure meticulous attention to detail and optimal transaction outcomes. (More details here).
Time Estimate: on average 2 - 14 weeks
Maintain and grow
When applicable, provide ongoing support to ensure seamless integration and sustained success. Continuously identify new opportunities for the next phase. Implement effective post-transaction integration plans to realise the full potential of the transaction while keeping doors open for future opportunities.
In partnership with management, we continue to reflect on performance and proactively identify new growth opportunities to drive continued success.
Time Estimate: Ongoing
Bespoke engagement approach
Our team understands that each business is unique, with their own set of challenges, goals, and opportunities. The firm's bespoke engagement approach, led by experienced directors, is meticulously structured to deliver high-value solutions that address the specific needs of each business we work with.
Prepare and execute a specific deal
We ensure optimised deal preparation and expert execution, guiding our clients to the best possible outcomes.
Year-round advice and deal execution
Working hand-in-hand year round, from strategy to planning and executing the optimal deal at the right timing.
Strategic growth advisory and execution
Ongoing support in crafting and implementing comprehensive strategies for sustainable, long-term growth.
Advisory board guidance without execution
Ongoing strategic advice and support as a trusted advisory partner, without direct involvement in deal execution.
We're here to help
At Caldera Capital, we respect and value every enquiry we receive. We will do our best to assist you or, at the very least, guide you in the right direction.
