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CAN MIDDLE-MARKET FIRMS WITHSTAND A CAPITAL CRUNCH?: Insights from the AlixPartners 18th Annual Turnaround and Transformation Survey 4
As rates have risen, lenders are looking to harness
strong yields from "better" borrowers that show a lower
risk profile. In these times, they will lean towards these
opportunities compared to the riskier situations that may
have been more enticing when rates were lower.
The lingering effect of turmoil in financial services could
also be an exacerbating factor. More than three-quarters
(78%) of respondents thought that the uncertainties
introduced by recent banking failures will worsen capital
market conditions.
To respond effectively, businesses need to accept the
things they cannot change and display the courage to
change what they can. Approaching cost base with a
"no-stone-unturned" mindset is a useful defensive move
in difficult times. This includes talking to suppliers to
ensure cost reductions are being passed on in markets
where the price of energy is edging down from recent
peaks. Similarly, rigorous cash focus (such as inventory
reduction) is within the power of executives to deliver,
irrespective of external factors.
Decreased
THE AVAILABILITY OF CAPITAL
IN RELATION TO THE PREVIOUS
YEAR HAS:
6% 27%
Increased Remained flat
67%
DAVID
ORLOFSKY
Partner & Managing
Director, New York
" "
As rates have risen, lenders are looking
to harness strong yields from "better"
borrowers that show a lower risk profile.
In these times, they will lean towards these
opportunities compared to the riskier situations
that may have been more enticing when rates
were lower.