Real solutions for hockey stick projections
• Sell. All or a portion of the business may have to go before a lender calls in a loan. On the down side, this adds significant time pressure to complete the transaction. As well, prospective buyers will be aware the company is experiencing financial troubles. While these issues will affect the price and the structure of the deal, moving all or part of the business to new ownership preserves value.
The success of these solutions relies on acting quickly and providing management with an opportunity to resolve fundamental issues. Management teams that successfully refinance, restructure or sell use timely, detailed financial information to produce realistically optimistic projections. After all, hockey sticks don’t win financial competitions; they only win hockey games.
Christopher Porter is a vice-president in the transaction advisory services and financial restructuring practice of BDO Canada Ltd. (www.bdo.ca). Call (416) 369-3062 or e-mail cporter@bdo.ca.
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