Investing at Link Resource Partners with Roy Murad

2010-01-29T13:55:00.000-08:00

Roy Murad is the senior partner of the investment banking firm, which has been in the industry for 30 years.

Every business has capital requirements. At Link Resource Partners, we help our clients get access to the capital they need, we structure that capital to meet our clients’ objectives and we lower the cost of capital.

Link Resource Partners specializes in aiding clients to raise equity, senior debt, asset based debt or sub-debt. By utilizing our market knowledge and corporate finance expertise, we deliver recommendations that address our clients' current needs and acts as the basis for future growth. We consider all available options to the client, and recommend the best solution using our sophisticated treasury, finance expertise, and market knowledge.

Whether we are hired to deliver one-time financing or to serve as the corporate finance arm of a company, all of our clients receive the benefits of our contact base and industry knowledge.

M&A: We help clients acquire and sell businesses

Mergers and acquisitions (M&A) involve risk. Getting experts involved in an M&A process reduces the inherent difficulties associated with completing M&A transactions. By understanding the process and knowing how and when to deal with the operational, financial, and informational elements of a deal, you increase the likelihood of successfully closing a transaction.

Link Resource Partners is committed to implementing successful mergers and acquisitions for our clients. We have a considerable amount of experience in this segment as we perform a variety of M&A assignments, in addition to other investment banking services. Whether you are looking for help in identifying or approaching acquisition targets, financing an acquisition, or discreetly exiting a business or division, we can provide the strategies and discipline required to meet your objectives.

We view an M&A assignment as one part of a client’s overall growth strategy. We utilize our financing capabilities and capital market insight to establish strong partnerships and integrated solutions for our clients.

Where to begin?

How much capital is required? Where will I get the capital? What are my options? How can I finance this growth? The merger is appealing, but how can I provide the financing needed to execute the deal?

These are questions all entrepreneurs face. As business changes, you will face finance and capital related challenges. At Link Resource Partners, we know these issues are difficult to deal with, but crucial for your business. We deliver expertise and professional experience to our clients in response to these challenges and consider the dynamics of our clients' specific business and industry.

Challenges that we regularly address include:

Growth or seasonality pushed you out of covenant with your bank
At your credit limit and still require working capital
Global supply chain forced you to carry more inventory
Want to know how to take advantage of your payables
Faced with a once in a lifetime acquisition opportunity but do not have the necessary finances
Need to buy out a partner/owner
Frustrated with banking covenants
Bulge facility is inadequate for business seasonality
Too much capital is tied up in long-term assets
Temporary or project financing required

There are a number of alternatives available to solve each problem. The key to any problem is finding the optimal solution . This is where Link Resource Partners can provide you, our clients, with our value-added services. We do not just offer a solution; we deliver on the right solution to meet your specific needs

Define the objective

To provide our clients with the capital they need at a lower cost and on better terms.

Know & evaluate the possibilities

Bank Lines
Secured Term Loans
Subordinated Debt
Export Financing
Commercial Mortgages
Real Estate Sale/Lease Back
Asset Based Loans
Accounts Receivable Insurance
Private Equity
Capital Leases
Equipment Sales & Lease Back
Accounts Receivable Factoring
Construction Loans
Project Financing
Off-Balance Sheet Leases
Mezzanine Financing

Deliver the Optimal Solution

We, at Link Resource Partners, offer our clients the optimal solution by implementing any of the above tools to meet the objective of delivering the lowest cost of capital with the best terms and conditions.

It is imperative that your corporate finance partner has a deep understanding and relevant experience in all of the above areas. If they cannot offer the complete array of services, the only alternatives they will be able to offer are those that they understand best; instead, Link Resource Partners provides you with the optimal capital solution through our first hand and extensive experience using all of the financing vehicles available.

With Link Resource Partners' credibility and experience dealing with a complete spectrum of financial instruments, we are able to combine both conventional and innovative methods of finance towards creating the best solution for our clients.

Consider capital in the same manner as you would consider a fixed asset; there are benefits to ownership, but at the same time, there is also a cost of ownership. It is up to you to determine and realize the benefits, and it is up to us to minimize the total cost of ownership. Total cost of ownership includes not only rate or dilution, but all costs, both present and future, in obtaining the capital. It is obvious that evaluating a capital solution involves looking at the rate of return, however, to minimize the total cost of ownership requires experience from a broader perspective.

Is the money available?

First, we have more sources of capital. Your chances of accessing a solution with us are enhanced as we regularly deal with every type of financial instrument. For example, few finance groups are equally adept at completing a private equity financing as they are renegotiating a senior bank line of credit. With our expertise, we are able to cover the large spectrum of financing techniques and products and, therefore, increase the availability of funds.

Second, we leverage more from each source. We know how to match clients with sources to achieve the best business terms. We achieve higher margins and valuations through the application of our experience and market leverage.

Finally, we are able to support our clients through the use of our own capital.

What financial instrument is most suitable?

Each financial instrument is designed for a specific purpose that has a defined target group and, as a result, operates under specific criteria. Whether the borrower or investor is sensitive to interest rates, advance rates, amortization periods or the term of a loan, the primary criterion that determines the cost of capital is the source’s perception of risk.

Why can one bank offer lower interest rates to certain clients? Different institutions have different perceptions of risk in each industry and in each deal. Although ratio calculations, cash flow, debt service and profitability to a large degree influence the cost of capital, other elements also play a significant part.

As part of any of our mandates, we assist our clients to promote the strengths of their company and manage or bolster any areas of concern. Our ability to leverage our relationships, correctly analyze and package each deal and match them with lending ensures that our clients receive the most favorable lending terms.

Analyzing our client’s balance sheet helps determine which borrowing instrument is most appropriate. However, this does not mean that lenders will be equally receptive to a file. Understanding which lender is active in a specific market and the reasons behind it is critical when positioning a file. Although the market is comprised of a variety of lenders and credit instruments, we structure all of our files to target the right lender. Our objective is to save time and money, but more importantly, to ensure that today’s financing solution can act as the basis for our clients' future needs.

What does an optimal financial solution mean?

It is the best balance of minimizing the cost of capital and at the same time, not creating unnecessary high levels of risk.

Many businesses immediately turn to equity investments when they need capital, usually with the belief that a debt solution is not available. Our strategic advantage is that we give our clients access to debt and equity markets. It is valuable to consider a debt solution as it avoids dilution equity and it can dramatically increase the client’s returns.

For example, if your company needs access to additional working capital because of a seasonal trend and your bank will not provide a bulge, a short-term factoring solution, mezzanine or sub-debt might be a better solution than switching banks or selling equity. The point is that we are able to help you achieve the best solution due to our experience and expertise in understanding all of the available alternatives to our clients problem.

Our approach with any project or client is simple. First, we identify the business issues and, with the client, agree on a financing strategy. Together we consider the following issues: the sources of financing most likely to be available, our client’s optimal debt/equity mix, possibly using hybrid products, and the appropriate timing. Second, we address the critical business issues and generate the requisite financial and business information. Third, we go to the market and proactively work through the lending cycle. Finally, we ensure that the transaction receives the appropriate funding.

Often transactions involve multiple creditors and, therefore, necessitate inter-creditor agreements. Our deals survive the legal process due to our thorough analysis right from the start. Delivering on everyone’s expectations and protecting the client’s best interests through this process requires deep experience and leadership on our behalf.

Does our relationship terminate after the transaction is complete?

Our involvement does not stop with funding as we see beyond the immediate transaction. With most clients, we evolve into an ongoing resource as a trusted source of capital advice and solutions. We help our clients maintain positive relationships with their lenders beyond closing the deal, and our lenders also view us as an important resource. It is not uncommon for a lender to seek out our assistance to address potential issues before they become problematic – assistance that is always forthcoming.

We are here to support our clients, the lender, and the original deal beyond the initial agreement. We are able to build both comfort and confidence to investors and lenders when they are presented with Link Resource Partners’ deals; this translates into better terms for our clients.

What will you provide?

Our customers continually seek our service as they feel confident that we meet their financing requirements as we act as the conduit to broader capital markets. From the time we present a Discussion Paper to the moment of funding, we manage the entire lending process to ensure the we are efficient in providing a successful conclusion.

We deliver valuable experience, expertise, and a number of resources to manage and deliver on the funding project. Our tenure, velocity of transactions, and market exposure is second to none. Projects and transactions are managed via a team approach at Link Resource Partners with a single, senior representative managing the project who is responsible to the client.

Since we take ownership of delivering your financing requirements, we are often viewed as your company’s financial arm and we take this responsibility very seriously. Our successful track record proves that we become a positive element in our clients’ organizational structure, such that continuity with our clients becomes critical.

Negotiating the terms of loan documents

Often, the terms and conditions of credit facilities are rigid. Depending on the deal and the lender, our goal is to negotiate terms that limit the number of financial covenants our clients need to report on. It is not uncommon to negotiate as little as one or two financial covenants with our deals. We manage this by initially creating a competitive environment for the business with potential lenders during the Discussion Paper stage so that no surprises arise when a Term Sheet and/or Commitment Letters are delivered. If a lender is unwilling to limit the covenants at the outset of a deal, we always negotiate the terms under which covenants and any guarantees can be eliminated in the future.

With respect to personal guarantees, the size of a deal and the condition of a company are the significant factors as to whether a lender requests personals. As a general observation, the smaller the deal, the more likely it is that a lender will require personal guarantees because of the risk associated with lending to a smaller company. Larger deals are more balance sheet exercises and lenders base their decisions on the merits of a deal and balance sheet. The objective is to eliminate, and if that is not possible, to mitigate, the extent of personal guarantees. The best approach is to have a partner with market and negotiating experience in this area, which is where Link Resource Partners comes in.

Arranging Inter-Creditor Agreements and Spreading Risk

Due to lending specialization and risk appetite, we often parcel out a credit facility to different lenders. For example, one lender may want to provide senior debt but does not want the equipment financing. Conversely, we may suggest breaking up a credit facility to prevent one lender having leverage over all the assets of the business. A cost and risk analysis is usually performed to determine the best manner in which to compartmentalize borrowing needs and simplify the process.

Since many of the financing assignments we work on involve arranging multiple credit facilities from multiple sources, we have the level of expertise required to navigate through this process. Working through the numerous inter creditor agreements such as postponements, subordinations, and standstill agreements, while maintaining the best interests of the client, is complex and requires an experienced advocate operating on your behalf. Our ability to act as the intermediary between lenders, and provide realistic options early in the process, prevents deals from breaking down when they are in the legal phase. The game plan that we choose at the beginning is clearly outlined to the lenders so that individual expectations are aligned with a master plan on how a deal will evolve.

Increasing Margin Availability and Improving Working Capital

If your company is constantly at the edge of its line of credit’s margining limit, we will review the existing facility for new clients to determine whether there is more room to squeeze out working capital. While most have set margining policies, there are methods to help increase line availability that we can explore.

Balance Sheet Enhancement - Recapitalize and Restructure

Most companies routinely go through the process of re-capitalization and restructuring. The condition of a company’s balance sheet is usually the prime indicator of a company’s health and dictates what financing instruments are available to it and what steps are required to streamline operations. Schedule “A” banks have well established lending criteria that can often act as barriers to entry for many clients. The tools we have at our disposal help convert marginal deals into conventional banking deals. How do we do this? By addressing balance sheet deficiencies and correcting operational inefficiencies.

Every business owner wants to secure the cheapest financing available to it. In order to do this, a file needs to be positioned and lenders targeted such that it hits their sweet spot. If a company’s debt to equity position is too high, or its current ratio coverage is to low, a common approach for us is to provide a pure equity solution or a mezzanine solution through our BCC fund, tailored so that the money invested is treated similar to equity. These potential injections are used in order to immediately address the covenant conditions most banks require to pursue a deal.

Further balance sheet solutions can also include arranging a sale and lease back of company assets so that the debt associated with those assets is removed from the balance sheet. While this may have a slightly negative effect on the income statement, the advantages outweigh the disadvantages, and help strengthen the financial position dictated by the balance sheet.

In conclusion, corporate finance is not an adjunct or bolt on professional service to your business; it is integral to your business. The business, its balance sheet, its income statement, its customers, and owner are dynamic to one another. We succeed in helping clients get more from the functional area of corporate finance not only because we are experienced in corporate finance, but because we are truly experts at understanding our client’s business. Through our services, together, we get the most from the dynamic relationship between your business and corporate finance.

Investment Banking With Roy Murad

2009-11-25T09:56:00.000-08:00

When people ask me what I do, they then often ask me, "Roy Murad, what is Investment Banking?"

A lot of people nowadays all want to be “in investment banking”, but somewhere along the way, the true meaning of the profession has been lost to society’s impression of what it is to be an investment banker. Being an investment banker does not mean you are on the phone selling a bunch of people on stocks and bonds, and it also does mean you are relaxing most of the day on the beach while you are closing deals and making millions of dollars.

Being an investment banker is about problem solving. Clients come to you with serious problems that in some of the most extreme cases can involve their own personal assets, which can be tied into their company. A true investment banker is strong-willed and can take on these problems head on. Companies, whether they are struggling or not, do not need another person who will pass their problems off to someone else. They are looking for solutions, and a person who can execute on this solution.

He is also knowledgeable in the industries which he chooses to work in. For example, if a manufacturer of bottled water wishes to engage the firm for a raise, a true investment banker will understand the challenges that a manufacturer may go through as an entrepreneur, and be able to relate these issues towards financially relevant information. He must then use this information in order to explain the product and the problems to their investors.

Finally, an investment banker must be able to understand the investors as well the client. After all, this is an intermediary business, and investment banking is about mediating both sides and smoothing out any issues they may have in order to make the investment relevant to both sides.

The most important thing to remember is that an Investment Banker is not a broker. That is, they do not get paid for introducing a client and investor and then standing back waiting for a commission. An Investment Banker builds equity, trust and a relationship with the client in order to make sure that he is not only satisfied with the transaction, but that it improves his overall quality of life.

Link Resource

2009-10-28T15:18:00.000-07:00

I am senior partner at Link Resource Partners. I thought I might take a moment and describe what it is we do there.

Link Resource Partners specializes in securing financing, implementing mergers and acquisitions, and selling off divisions of businesses. Our focus is primarily start-up companies, small cap listed companies, and small to medium sized businesses.

Roy Murad

2009-10-24T20:59:00.000-07:00

Roy Murad, senior partner and principal of Link Resource Partners, brings 30 years of corporate finance experience to the team. After working in New York City and Montreal, Roy has based operations in Toronto for the past 15 years. As both a merchant and an investment banker, Roy is a leader in the small and mid market, possessing extensive experience and relationships across a wide spectrum of corporate finance activities. Roy graduated at McGill University.

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