Why Asset-Based Lending Can Fund Companies That Lose Money The Collateral Selection Criterion explains why asset-based lenders underwrite eligible collateral, controls, and the working-capital cycle—not last year’s profit. A lender looks at a company that lost money last year and declines. A second lender looks at the same company and extends an asset-based facility....
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The Operating Cycle Standard: Why SDE and EBITDA Are Entry Points, Not Conclusions Accrual earnings can start the valuation conversation, but working capital, cash conversion, and true free cash flow determine whether a business can sustain the price, debt, and obligations it is being asked to carry. Most lower middle market valuation and credit conversations...
The Balance Sheet Governance Test: Is Your Capital Stack Eroding Your Balance Sheet? How the Harmony-Harm Threshold turns the Supportable Borrowing Base into an ongoing governance standard for multi-instrument capital stacks A capital structure does not fail the moment it crosses a threshold. It fails the moment it crosses a threshold that no one was...
The Supportable Borrowing Base: How to Calculate the Maximum Your Balance Sheet Can Sustain Across All Facilities How the Equity Adequacy Test, the NWC Floor Stack Test, and the Debt Service Coverage Test Establish the Binding Ceiling for the Full Stack Most businesses know what their individual facilities will advance. The ABL line has a...
