Financial engineering



The financial engineering and the alignment of the business leaders’ and investors’ interests are fundamental aspects of LBOs and fund raisings.
They require to be prepared at an early stage.

Which questions to ask first?

  • How does your company perform in terms of :
    – Past growth and growth perspectives (on a stand-alone basis / by means of company acquisitions)?
    – Significance and recurrence of results?
    – Predictability of the level of activity on the short, medium and long term?
    – Level of capital expenditure and change in working capital ?
    – Sensitivity to the global economic situation ?
    – Barriers to entry ?
  • Are the stockholders of the company also its business leaders?
  • Would the LBO or fund raising be accompanied by a change in the company’s leadership and/or management?
  • Is the change of stockholders’ structure likely to modify the way the company is managed and/or the access to certain resources?
  • Are the business leaders and managers of the company used to preparing and monitoring budgets and/or business plans?
  • Would a management package facilitate the achievement of the business plan?
  • What are the objectives of stockholders in terms of cash-out and reinvestment?
  • What is the current level of debt?
  • What are the forecasted operational cash flows?
  • What are the forecasted cash flows from investing activities?
  • Which forecasted cash flows are available for the repayment of an LBO debt and/or of a debt financing external growth?
  • Are the stockholders and business leaders familiar with the usual clauses of stockholders’ agreements?