What Should Middle Market Companies Know About Raising Capital?

September 28, 2019

Raising capital is one of the most essential tasks for any company that wants to grow, but what’s the best way for middle market companies to do that? They’re often too large for a small business loan, yet too small to take advantage of some of the largest funding options.

Still, middle market companies are one third of the nation’s gross receipts and provide a majority of jobs as well. They need capital. Here’s what they should consider when expanding.

What Should Middle Market Companies Know About Raising Capital?

Mid-sized companies that earn between $5 million and $1 billion in revenue every year make up the largest part of the middle market. These companies are in all industries and are often business-to-business (B2B) companies.

Numerous middle market companies are also niche-specific, which limits their visibility. Their public profile is low, and they can be anything from older, well-established businesses to startups.

For these companies, the process of raising capital is often more complicated than it should be. They cannot generally get the larger, more substantial loans received by larger businesses. That stems from a lack of significant collateral or extensive credit histories that plague a lot of companies in this group. While commercial and investment banks typically want the business of the middle market, they find that they cannot extend these companies the credit they need. Banks, however, are not the only option for companies that are part of the middle market.

Another option for middle market companies is to reach out to private investors, who may be interested because some middle market companies can turn into much larger businesses. Additionally, successful companies in the middle market make for very stable investments, and have low levels of volatility.

A third option is considering mezzanine financing, a way to raise capital that involves the creation of capital not secured by the company’s assets but on its ability to repay the debt through a steady cash flow.

How Do Advisory Services Assist in Raising Capital?

With the frustration so many middle market companies face when it comes to raising capital, there must be an option to help. Fortunately, there is. These companies can use an advisory service to improve their chances of qualifying for capital loans from banks and other lenders.

An advisory service can help them provide the most economically viable version of their business’ information when they apply for a loan through a restructuring of assets and liabilities and/or with the creation of a healthier financial environment.

Many middle market companies are highly viable, but they don’t showcase that on paper to their best advantage. When adjustments are made in order to show the company’s true bottom line and its strength in the market, the ability to attract investors and raise capital rises so it can get the influx of capital it needs to grow.

Choosing an Advisory Service

For those who are managing middle market companies and looking for ways to raise capital, an advisory service can be the right choice. But which service should the company choose? Does it matter? Yes, it does. Getting the right advisory service can make all the difference when it comes to the capital raising success of a middle market company.

At Scott-Macon, we provide expert advisory services to middle market companies, so they have the best chance of raising the capital they need to grow. We have more than four decades of experience, execution and analysis of the investment banking sector at the senior level. Our advisers specialize in areas from automotive to health care to aerospace so they have an intimate grasp of their clients’ industry.

By working with us, you can get the benefit of their financial expertise, market knowledge and strategy. Debt and equity financing, mergers and acquisitions, general corporate financial consulting, and valuations and fairness opinions are all within our areas of specialty.

Contact us to help you with the advisory services and capital raising goals you have, so your business can realize its true potential.