Not sure if you have seen this 4 page ad (in PDF format) for GE Lending or not, but it is quite interesting. It discusses capital structure for midsized firms. An area that does not get as much coverage from academics or many investment bankers.
recap_april05.pdf (application/pdf Object)
Some of the highlites for those who opt not to click through to the PDF file:
1. "As businesses grapple with such multiple challenges as an on-again and off-again economy and slowlyrising
interest rates, specialists from Wharton and GE Commercial Finance note that successful
organizations often exhibit an ability to quickly respond to market dynamics. With this in mind, they say
that debt financing is playing an increasingly important role in a company’s competitiveness. A responsive,
well-managed capital structure can add value and help a company to thrive while an inflexible, outdated
approach can drain a company’s cash flow, resulting in missed opportunities and restricted
growth."
2. "For John Percival, an adjunct professor of finance at Wharton, there’s really no distinction between a
good approach to financing and a good strategy. “There’s a common misperception that there’s a difference
between strategy and finance"
3. "if the firm’s fundamentals are sound and it has a solid asset base but is also weighed
down by fixed financing costs, it may be worthwhile to explore a debt restructuring. In such a situation, a
lender needs to take an active role—first to gain a deep understanding of the borrower’s operations and
needs, and then to structure a package that can address the strengths and weaknesses of the company.” "
4. "Current finance theory suggests that there is an optimal capital structure for a firm that finds the right balance
between the tax advantages of debt financing and the costs of financial distress that go along with too much
leverage, adds Wharton’s Percival."
Not bad for an advertisement!
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