The Situation
A business facing tariff and supply-chain disruption appeared, on reported results, to have substantially less borrowing capacity than its owners needed. Conventional underwriting of the historical numbers implied a meaningful sponsor equity requirement.
The obvious answer was that the business couldn't support the desired financing.
What We Did
Stephen approached the problem from both sides of the capital structure: what would a lender need to believe, and what did the underlying economics actually support?
The analysis separated temporary tariff and supply-chain effects from normalized earnings and built the evidence supporting a 60% increase in reported EBITDA. The financing process was then structured around the economics of the business rather than simply accepting the first interpretation of the reported numbers.
The Outcome
- The company obtained a 3.8x senior unitranche financing plus a $10 million unfunded revolver for additional liquidity, eliminating an anticipated sponsor equity contribution of approximately $10 million.
Why It Matters
The financial statements hadn't changed. Our understanding of what they meant had.
Sometimes the most valuable answer comes from asking whether everyone is solving the right problem.
