Merchant Bank Services provide the breadth, depth and attention from a single firm that usually comes from many sources in typical middle market transactions.

A merchant banker often plays multiple roles that include those of an entrepreneur, operational and financial management advisor, in-house investment banker, corporate development advisor, specialized industry analyst, strategic planner and investor. Merchant bankers work with management and operating partners to enhance the ultimate enterprise value of a company over time. Merchant banker compensation is tied to deploying their capital, financial and/or human, in scalable operating companies which can benefit from their expertise. They clearly distinguish between companies that are: 1) financially challenged but viable, 2) financially successful and 3) economically successful. The vast majority of all companies fit in the first two categories. The charge of the merchant banker is to help his clients become economically successful by realizing consistently superior returns and results which benefit customers, employees, vendors, lenders, management, owners and investors.

Corporate advisory services

Merchant bankers offer customized solutions that assist their clients in achieving the greatest return on their invested capital. This may involve solving the financial problems their clients face before growth strategies and growth capital can be pursued. Merchant bankers typically focus on marketing, operations and asset utilization to assess overall cash margins and working capital practices within the company. They advise the company on operational and financial enhancements that may be available. Where applicable, merchant bankers provide rehabilitation, turnaround and recovery strategies that help companies to recover from their current position. They also provide advice on appropriate risk management strategies including market, operational and financial hedging strategies.

Private Placement advisory services

Merchant bankers represent a form of private capital that is willing to roll up its sleeves. The majority of private capital sources require that a company meet the following basic financial benchmarks:

• History of stable operating cash flow (Recurring EBITDA)
• Sound current/future working capital (Trading Asset Quality, Trade Payable Support)
•  Sound company and industry trends (Growing Company in Stable Markets)
• Critical mass of company (Sufficient size to not rely on one/two people)

Private placement or private investment capital comes from private and institutional investors in the form of debt, convertible debt and/or stock that generally does not need to be registered with the Securities Exchange Commission. Regulation D is the most popular form of non-public private placement and is documented by a Private Placement Memorandum (PPM). Merchant bankers assist their clients in preparing to meet the general financial benchmarks outlined above by:

1. objectively assessing the quality, viability and timing of any investment offering the company might need, and
2. preparing for the best timing and structure for a private placement.
    

Restructuring services

Dynamic markets and the general economy are all uncontrollable influences that represent systematic risk. When those forces threaten to overwhelm a company, a merchant banker assists the management of the client company to successfully restructure various activities through various tools, i.e. business reorganization, mergers and acquisitions, divestitures, management buyouts, joint ventures, etc. To help companies achieve the objectives of their restructuring strategies, the merchant banker participates in different activities at various stages.  Those activities include understanding the objectives behind the strategy (objectives could be either to obtain financial, marketing, and/or production benefits). The key restructuring stages also involve a thorough search for the right business reorganization partners. Even when existing strategic partners are willing to help restructure a firm, the best reorganization partners are found (or retained) when sound strategic planning occurs and strategic decisions are quickly implemented. Many reorganization attempts fail due to a failure to recognize and be accountable to key strategic partners or lenders, often resulting in “partner fatigue” or “lender fatigue”.

Financial, marketing and operational challenges that occur at the industry and company level, particularly those that are peculiar to a given industry, are generally controllable or expected influences.  These controllable or expected influences represent non-systematic risk. Industries are increasingly in transition due to both systematic and non-systematic risk.  The strategies necessary to overcome non-systematic or internal risks are generally different from those required to overcome broad market challenges.

Both challenges, systematic and non-systematic, require a proactive approach in maintaining company viability and maximizing company success in spite of market, industry and company dynamics.

Our reorganization expertise assists firms in restructuring outside of bankruptcy or through Chapter 11 bankruptcy reorganization. When utilized proactively, Chapter 11 is intended to be as much a business reorganization tool for creditors as for debtors. When any business reorganization is pursued passively or reactively, a firm will quickly succumb to the statistic that over 85% of all companies entering Chapter 11 bankruptcy will be liquidated. New bankruptcy laws effective October 2005 will severely compress the timing and flexibility of reorganization options and will contribute to an even higher rate of failure. Our expertise brings a seasoned professional perspective and a methodical sense of urgency to the business reorganization process.

Funding Structures

Specific funding types and tools that Oak Capital Group can provide its merchant banking clients to achieve the best financial outcomes include:

• Mezzanine Debt
• Credit Enhancements
• Project Financing
• Distressed Note Purchases
• DIP Financing
• Reorganization Financing
• Bridge Loans

Restructuring Services

• Business Reorganization
• Chapter 11 Bankruptcy Reorganization
• Turnaround Financing
• Liquidation Mitigation
• Bridge Services (363/Secured Party Sales)

Restructuring Roles

• Corporate Financial Consultant
• Retail Management Consultant
• Distribution Management Consultant
• Manufacturing Management Consultant
• Supply Chain Consultant
• Turnaround Management
• Turnaround Investor
• Chapter 11 Reorganization Advisors