Credit Readiness For Borrowers 072110 Jc Edits

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A Tatum program for mid-market companies seeking debt financing. You need to be ready to meet the bank\'s requirements!

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Credit Readiness For Borrowers 072110 Jc Edits

  1. 1. Credit Readiness for Borrowers<br />July 2010<br />Contact:<br />Name<br />Title<br />Phone<br />Email<br />
  2. 2. Contents<br />How your company benefits from Tatum Credit Readiness<br />Ready for credit<br />Tatum deliverables<br />Previous successes<br />Who we are<br />Earning your trust and business<br />
  3. 3. What is the value of using Tatum before engaging with lender?<br />Faster access to credit<br />Tatum brings focused, intensive effort on obtaining credit facility<br />Tatum knows the local credit market<br />Increased probability of credit approval<br />Tatum’s experienced CFOs know what lenders want<br />Tatum adds independent, objective perspective to future financial performance<br />Tatum preemptively identifies and plans mitigation strategies sustaining covenant compliance<br />
  4. 4. Tatum deliverables<br />Bridge expectations between bank & borrower<br />Required business modeling<br />Cash flow<br />Covenant compliance & validation<br />Business plan, MD&A<br />Strategy<br />KPI’s & metrics<br />SWOT analysis<br />Prepared for bank audit &appraisal<br />Loan application tailored to lender requirements<br />
  5. 5. Post-closing deliverables<br />Management processes to “stay out of trouble”<br />Robust budgeting & forecasting process<br />Covenant compliance sensitivity modeling<br />Management accountability for achieving plan<br />Timely, accurate closings and financial reports<br />Identify & report KPI performance to management and operational teams<br />
  6. 6. Previous successes<br />The Legacy Companies (f/k/a Greenfield World Trade)<br />BSN<br />Gibraltar Metals<br />Campus Management<br />
  7. 7. Previous success: The Legacy Companies(f/k/a Greenfield World Trade)<br />Industry: Foodservice Equipment Distribution Loan Type: Asset Based & Cash Flow<br />Amount: $16,500,000 Term: 3 years<br />Background<br />Company was founded 12 years earlier<br />Historically funded from operations and by its founder<br />Beginning to expand rapidly via organic growth (20+% annually)<br />Prior bank had fatigue due to internal issues within the bank<br />Challenges<br />Financial records 3 months behind<br />4 ERPs (2 platforms) dysfunctional and not integrated<br />Weak processes and controls<br />Rapid growth surpassing Working Capital<br />Tatum Solutions<br />Created a 36 month operating plan and a financing strategy to fund future growth<br />Prepared loan package and prepared the Company’s war room<br />Introduced potential solutions for the ERP evolution through an introduction to Tatum Technology Solutions<br />Negotiated covenants and terms in challenging economic and time sensitive environments <br />Results and Value Created<br />Term sheets offered by 3 financial institutions<br />Enabled company to fund and maintain its organic growth tactics<br />
  8. 8. Previous success: BSN<br />Industry: Consumer Products Loan Type: Asset Based<br />Amount: $15,000,000 Term: 3 years<br />Background<br />Market leading developer and marketer of premium sports nutritional supplements<br />Founded in 2001, revenues grew to $134 million in 2009<br />Inc. Magazine’s list of Fastest Growing Private Companies in 2007 & 2008<br />Challenges<br />Litigation; defaulted senior debt; negative cash flow; past due vendor payables<br />Tatum Solutions<br />Refinanced senior debt<br />Raised bridge loan to fund litigation settlement<br />Scripted operational turnaround achieving record profits and cash flow<br />Repaid senior debt and bridge loan in 15 months.<br />Results and Value Created<br />Very happy, wealthy shareholders!<br />
  9. 9. Previous success: Gibraltar Metals<br />Industry: Industrial Distribution Loan Type: Asset Based<br />Amount: $2,600,000 Term: 2 years<br />Background<br />Company had been purchased out of bankruptcy by a private equity group a year earlier<br />Company was struggling to adapt in a challenging economic environment<br />Prior bank had fatigue and line had onerous and expensive terms<br />Challenges<br />Disproportionate share of old accounts receivables <br />Inventory in four locations around the country with poor accounting controls<br />Never properly capitalized by PEG<br />Expense not in line with lower sales volume<br />Tatum Solutions<br />Restructured organization to achieve positive cash flow<br />Instituted cash controls: rolling 13 week cash forecast, collected on old A/R, structured out vendor payments<br />Credible financial projections, accounting controls, revalued inventory<br />Prepared loan package, negotiated covenants and terms in challenging economic and time sensitive environment <br />Results and Value Created<br />Increased gross margin by 34%, decreased operating expense by 15% and credit line interest expense by 54%.<br />New line of credit within two months, start to finish<br />Enabled company the time and flexibility to finish turnaround strategies<br />
  10. 10. Previous success: Campus Management<br />Industry: Software Loan Type: Cash Flow<br />Amount: $4,000,000 Term: 3 Year Revolver<br />Background<br />Company was in its 5th year of development<br />Funded organically due to unusual circumstances preventing VC or PEG financing<br />On the verge of rapid expansion<br />Uneven cash flow cycle, most of cash collected in first two months of fiscal year<br />Challenges<br />Financial records 18 months behind<br />Never audited or reviewed<br />Not properly capitalized<br />Rapid growth outstripping working capital.<br />Tatum Solutions<br />Brought the financial records up to date within weeks<br />Created credible budget for the next twelve months<br />Determined that the ideal loan was a revolver with a yearly cleanup<br />Prepared loan package with reasonably predictable visibility down to individual customers<br />Results and Value Created<br />Term sheets offered by multiple banks<br />Loan refinanced in 2 years<br />Increased company valuation 12-fold from $8 million to closed sale price of just under $100 million 3 years later<br />
  11. 11. Who we are<br />Tatum’s Processes<br />Financial, Operational, and Technology expertise<br />Solution/Deliverable focused<br />Consistently exceed expectations<br />Velocity with any size company<br />Tatum’s Assets <br />~1,000 senior executives<br />6,000+ clients<br />100% client satisfaction survey <br />Billions in capital raised for clients<br />Create more value™<br />
  12. 12. Earning your trust and business<br />Next steps<br />1.<br />2.<br />3.<br />

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