Sidestepping the Risks of Corporate Debt Deals

Start-up advisory firm Aequitas argues CFOs need help dealing with underwriters’ conflicts of interest.

Issuing debt can be a daunting and time-consuming effort, especially for CFOs at small or midsize companies that go to market infrequently. David Pritchard and Jonathan Cunningham, founders of Aequitas Advisors in Stamford, Conn., argue that while CFOS at large public companies with well-staffed finance departments might handle such tasks on their own, a CFO at a company with fewer resources or less experience in this arena should consider working with an independent capital markets advisory firm. 

“The vast majority of corporate CFOs only approach the public markets very intermittently, coming to raise capital every three, four to five years,” Pritchard points out, adding that it behooves such companies to seek help in getting the best deal possible in what can be a highly conflicted and complex marketplace.

So how can advisory firms such as Aequitas help corporations?

Michael Biehl, CFO at Chart Industries, a Cleveland, Ohio-based manufacturer of equipment for the industrial gas industry with $794.6 million in 2011 revenue, and an Aequitas client, says having an adviser “looking over your shoulder” can make the bank selection process far more competitive and weed out banks that are not up to snuff or familiar with more complex deals. Once the selection is made, an independent adviser can monitor the bank and its marketing efforts, says Biehl, helping to make sure the bank is doing the most for the company’s issue at all stages of the process. 

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