Despite the economic situation, many private and corporate lenders are still actively looking for opportunities to invest and provide capital for businesses.
At AlexanderDorrington, we have worked with lenders for many years in all steps in the credit cycle, from input to exit. We continue to become recognised as leaders in the application of credit law for the SME sector.
Risk management for investors is our core focus in our finance and credit law division. We see five key parts in the area of credit law for our clients:
In recessionary times, there are many people selling a business or looking at a buying a business which means there are as many investment opportunities as ever. In fact, more successful businesses are started in tough economic times than in easier times.
The problem for you as an investor is not so much identifying the best opportunities but setting up investment structures with the right security and the ability to recover your capital input.
Credit and securities
When businesses are looking to raise capital, for asset financing, lease arrangements, construction and project finance or buying a business, if you are considering acting as an investor or lender, it's essential to have the correct loan documentation in place.
While the principles of lending are common, each situation is different and needs specialist knowledge and experience to protect your investment.
We can help you prepare the loan agreement and security documents. This includes confirming the valuation for security and ensuring the security is in place before any funds are released.
There are plenty of good opportunities for you so you shouldn't be put off investing. You just need to make sure you are protected.
Should businesses run into difficulties and you need to take steps to recover your investment, we can help you. The law is complex and requires you to follow specific steps to avoid unnecessary costs. You must seek specialist legal advice and action.
And because this stage involves people who are inevitably under stress and difficulties, we have found that taking a more “human” approach brings better results for our clients.
Our commitment is to you, the lender, but by appreciating people's emotional situation, we can help you work out a solution which aids the recovery of the investment as best as possible.
Restructuring for investment protection
If a business is in difficulty, often the best way protecting your investment and for sustaining the business is to create new business ownership structures or simply a restructuring of the investment vehicles and shareholdings.
By adopting this approach, business owners are able to continue trading giving them the opportunity to not only maintain their livelihood, but to be able to repay your investment.
Most businesses fail not through being bad businesses, you wouldn’t have invested in the first place, but often through poor management skills.
Restructuring provides the chance to strengthen the management and grow the business.
This means your investment, based on your shareholding, will grow and, in the medium-term, will be better protected.
Sometimes the only option is the ultimate recourse – insolvency. Whether through liquidation, receivership or some other regime.
In this case, as the lender, you want to maximise your recovery and it's at this point that our expertise in creating the best security documentation at the start of the investment process, comes into play.
We will act for you to enforce those securities as probably a mortgagee sale of the home or business to recover your investment.
It's understanding and creating the closed loop of investment and asset protection that gives you the edge in your business lending.
Knowing you have a strong and enforceable security in place means you can rest assured that your investment is protected and secure while it is also working to give you a good return.
Call (09) 375 2770 for an appointment to discuss your credit law matters.