{"id":3099,"date":"2015-01-12T22:00:31","date_gmt":"2015-01-13T06:00:31","guid":{"rendered":"https:\/\/masonmyers.com\/?p=3099"},"modified":"2015-01-28T12:58:35","modified_gmt":"2015-01-28T20:58:35","slug":"companies-founders-deserve-better-financing-options","status":"publish","type":"post","link":"https:\/\/masonmyers.com\/companies-founders-deserve-better-financing-options\/","title":{"rendered":"Companies and Founders Deserve Better Financing Options"},"content":{"rendered":"
Business financing and capital raising are full of contradictions. \u00a0The world is awash in capital, but the availability of capital to businesses is often binary. \u00a0For some, too much capital is stalking them. \u00a0For others, the switch to turn on capital flow remains hidden. \u00a0Size can be a determining factor. \u00a0Debt providers, in particular, seem to believe that larger means safer, even if they are lending money at minuscule rates of return. \u00a0For small businesses, nothing is more fickle\u00a0than bank financing.<\/div>\n
\"Fickle<\/a><\/div>\n
<\/div>\n

A financing carousel?<\/h4>\n
For\u00a0equity capital, even if the capital flow is turned on for their company, founders face options that are limited. \u00a0There are the \u201cstrategic\u201d providers of capital, otherwise known as competitors or semi or potential competitors who will\u00a0inevitably attempt to shape the company strategy to suit\u00a0their other interests. \u00a0Then there are the capital providers (traditional venture capital or private equity) that are all about exiting as soon as they enter. \u00a0The industry of traditional equity financing is set-up to trade-in and to trade-out of companies. \u00a0This constant carousel of investors is sub optimal for a company and its\u00a0ability to earn outsize returns by building long-term competitive advantages. It is explained that this system developed because it is best for the investors. \u00a0It seems contradictory to me to require a company to be on a constant treadmill — turning over its equity investors — if the exact opposite is the optimal method for long-term value creation (in my opinion).\u00a0 There must be a better way.<\/div>\n
<\/div>\n

How Would You Like This Guy as Your Financing Partner?<\/h3>\n
<\/div>\n
A private equity fund manager had some\u00a0unbelievable quotes in the Wall Street Journal last week in talking about his fund, Charterhouse Capital. \u00a0He spoke about how his priority was current profits with no regard for his successor colleagues (and by implication, his portfolio company management teams and stakeholders). \u00a0His focus is all about profit maximization for the\u00a0here and now.<\/div>\n
<\/div>\n
\n
\n
\u201cThe absolute intention is to maximise the value of [Charterhouse] to the people who are there today,\u201d\u00a0Gordon Bonnyman, then chief executive and now chairman, wrote in a 2001 letter made public. \u00a0\u201cIn other words, no one is particularly concerned with the financial well being of those who will succeed us.\u201d \u00a0As the Wall Street Journal reporter interviewed him\u00a0in his office, he emphasized his short-term orientation.\u00a0\u201cI enjoy it. It\u2019s good at the time,\u201d he said. \u201cThat\u2019s it.\u201d<\/div>\n<\/blockquote>\n
There is nothing wrong with that strategy. \u00a0Company founders\u00a0and owners\u00a0just need to understand that guys like this exist in private equity. \u00a0If that is what you want, great. \u00a0If it is not what you want, be wise in picking a partner. \u00a0If a private equity guy treats his own firm\u00a0and\u00a0colleagues that way, how do you suppose he treats the management teams at his portfolio companies? \u00a0Not to mention, how do you suppose he treats the customers, employers, and other stakeholders of the portfolio companies? \u00a0There\u00a0is\u00a0a place for this type of strategy in the world, but founders and management teams deserve an option to choose this financing strategy — or something else.<\/div>\n<\/div>\n
<\/div>\n

Greybull Stewardship is An Alternative Financing Option, But Not for Everyone<\/h3>\n
<\/div>\n
I set-out to solve this problem for founders and management teams with my investment firm, Greybull Stewardship. \u00a0I selected the word Stewardship to convey that we are in this to be good stewards of capital and to be good stewards for the companies that trust us to be partners with them. \u00a0Greybull is not the optimal choice for someone who wants to treat their company as a short-term trading opportunity. \u00a0There are many other capital options that are better than us at that strategy. \u00a0Greybull is a better choice for management teams who want flexibility of if\/when to sell their company, how to grow\u00a0their company, and the ability to pursue unique strategies that create long-term competitive advantages.<\/div>\n
<\/div>\n
\n

Related Posts and Topics:<\/strong><\/h4>\n