Debt Analysis & Repayment:

Selby Associates brings creative solutions to companies that are operating under the pressure of improperly structured debt, erratic cash flow and insufficient working capital. The core of these solutions is uncovering the equity that is locked in the business and selling this equity to a Buyer. There are two common areas where we find this equity, goodwill and restructuring.

Goodwill is an intangible portion of the business that has value because it is a going concern and includes customers, vendors, employees, trade name, reputation, intellectual property and other intangibles. Banks do not lend against goodwill if you already own the company, however banks do lend against goodwill for a Buyer of a business. Selby Associates can locate a Buyer who will pay for this goodwill, which enables you to tap this resource.

Selby Associates views a company as a puzzle with many different pieces. To evaluate restructuring possibilities, we are proficient in “taking apart” and “re-assembling” the puzzle with the goal of increasing value. For example, create a division inside a company for the purpose of selling that division to raise cash. The inflow of cash will ease the debt burden of the remaining company and allow it to move forward better capitalized. Another example is to break the company apart and sell as smaller divisions, as sometimes the sum of the parts has more value than the whole. Yet another example is to uncover, fully document and support an unrealized strength, and sell the business at its newly increased value.

If your bank or creditors have concerns regarding your ability to repay your company debt, Selby Associates can examine your company, its debt obligations and debt structure to determine the best strategy for your situation. The goal is to provide a win-win situation for you and your bank, as banks and creditors are looking to solve your debt concerns as much as you are. Once a qualified Buyer is found and the sale is completed, your company, or a division of your company, can successfully go forward with a Buyer who has working capital, financing capabilities, contacts for growth and other resources to take the company to the next level. Also after the sale is completed, your company debt is paid off, you receive cash and you have the ability to move towards your next venture or future plans.


Examples of Selby Associates success:

A customer of Commerce Bank was unable to repay their line of credit and was therefore in default on approximately $3.8m of debt. Selby Associates was able to evaluate the company, propose a restructuring plan and work with Commerce Bank to provide the necessary time to sell the company. Commerce Bank was paid in full and the owner netted approximately $4m. This turn around from insolvency to the owner’s receipt of $4m was a result of the aggressive and creative solutions of a Selby Associates restructuring plan.

A customer of Commerce Bank with $1.1m of debt was in default on a loan and an equipment lease. Commerce Bank restructured the loan, which was essential to allow Selby Associates time to sell a majority share of the company. This company had the capability to generate a considerable amount of additional sales, but lacked the capital to fulfill these sales and ship product. The company needed a higher valuation to sell for a price that would satisfy the debt obligations and the owner’s needs. Therefore, Selby Associates proposed a restructuring plan: if the company could book these additional sales to show potential Buyers the considerable increase in the Orders Received and the Work Backlog and Selby Associates prepared a Capacity Report showing the steps needed to accommodate these additional sales, then Buyers would pay for this obvious growth. Although the company still needed resources to fulfill these orders, the company’s Orders Received and Run Rate increased and Selby Associates closed this transaction at a higher sale price than anticipated because of this documented growth. With the addition of an equity partner who brought capital and new financing to the company, the owner paid the company debt, received a substantial amount of cash, was able to stay on at the company and the Orders in House were fulfilled.

The owner of a company had died and the widow was left with the company and its debt obligations. The widow contacted Selby Associates for assistance. The critical issue in this case was acting quickly as the company will lose significant value if it is haphazardly operated without an experienced owner. Selby Associates sold this company and completed the transaction in 36 days. As a result, the widow fulfilled the debt obligations and received cash.