A robust and forward-looking financing structure is essential for growth, business continuity and value creation. Kruger Debt Advisory supports medium-sized companies in raising, restructuring and optimising debt capital. Independent, analytical and always focused on achieving the best outcome for your business.
Do you have a business with a financing requirement of at least € 1.5 million? If so, we would be happy to help you meet this need.
We support companies, shareholders and investors throughout the entire financing process. From strategic advice to implementation and closing:
Appropriate financing starts with insight. Not just into the figures, but above all into the business behind those figures. What should the financing enable? How is the cash flow developing? What risks does a financier see, and what level of risk is justifiable? Kruger provides a coherent overview of strategy, performance and financing requirements. With a positive yet realistic outlook: opportunities are clearly substantiated, risks are not glossed over but made explicit and, where possible, accompanied by risk management measures.
We examine the business model and the factors that determine cash flows. In doing so, we look at, amongst other things, market position, customer and supplier concentration, contract-based turnover, pricing, margins, seasonal patterns, investment requirements, the working capital cycle and operational dependencies. The quality of management information, governance and the role of shareholders are also relevant. After all, financiers do not merely assess historical figures. They want to understand what drives results, which risks could affect repayment, and what measures are available should performance fall short of expectations. We therefore present the company from the perspective of a credit committee reviewing the case, without reducing the company’s story to mere ratios.
We then analyse historical and projected financial performance. We assess the reconciliation between the profit and loss account, balance sheet and cash flows, normalise non-recurring items and highlight how much operating cash flow is actually available for interest and repayment. In doing so, we pay particular attention to working capital movements, maintenance and growth investments, taxes, lease liabilities, one-off expenses and any cash flows between group companies. A well-substantiated bridge from EBITDA to free cash flow is essential: profitability alone does not provide sufficient insight into repayment capacity. Where necessary, we refine or expand the forecasts so that assumptions are traceable, consistent and explainable.
On this basis, we determine the financing capacity, or debt capacity. The focus is not on the theoretical maximum achievable amount, but on a debt level that remains manageable even in the event of less favourable developments. We therefore model a base-case scenario and relevant sensitivities or downside scenarios. What happens in the event of a slowdown in turnover, pressure on margins, higher interest rates, delayed customer payments, additional stock build-up or postponed investments? We assess, amongst other things, leverage, debt service coverage (the future capacity to continue meeting interest and repayment obligations) and covenant headroom over the term of the debt. This provides insight into peak funding requirements, any seasonal financing needs, the desired repayment structure and the buffer required to absorb unforeseen developments. This prevents a company from being constrained again by an overly tight structure immediately after closing.
We then compare possible forms of financing and combinations thereof. Traditional bank financing may be attractive in terms of cost and the relationship with the bank, whilst a debt fund may sometimes offer greater leverage, speed or a bespoke solution. Asset-based lending, factoring, leasing, property finance, mezzanine finance, a shareholder loan or hybrid capital may be suitable as supplementary or alternative options. We assess not only the nominal interest rate, but also the term, repayment schedule, security, covenants, reporting requirements, availability for future acquisitions and the possibility of extending the financing at a later date or repaying it early. The optimal mix aligns with the useful life of the assets, the cash flow profile and the strategic agenda.
A robust analysis only becomes valuable when it is translated into a proposition that financiers can quickly understand, assess and defend internally. Kruger therefore does not merely collate the figures, but constructs a coherent financing narrative. This clearly sets out what sets the company apart, why the financing is needed, how the capital will be utilised, and from which cash flows the interest and repayments will be met. The proposal must be attractive, but above all credible: opportunities are convincingly substantiated and risks are transparently identified, including specific risk management measures. This creates a narrative that aligns with the company’s strategy and meets the information needs of a credit committee.
We translate this narrative into a professional financing memorandum, a consistent financial model and a well-organised data room. The memorandum covers, amongst other things, the company, the market and its competitive position, strategy, management, historical performance, forecasts, financing requirements, proposed structure, sources of repayment, security and key risks. In doing so, we ensure that high-quality explanations, figures and supporting documents are consistent with one another.
We then determine which financiers and forms of financing are best suited to the case in question. Not every bank, debt fund or alternative financier has the same sector preference, deal size, risk appetite, geographical focus, speed or requirement for collateral. Parties also differ in their willingness to finance growth, acquisitions, seasonal working capital requirements or temporary volatility. Drawing on up-to-date market knowledge and our network, we draw up a targeted long list and short list. We are selective in identifying the most suitable financiers and coordinate our selection with you before we approach the financiers in a targeted manner.
Kruger oversees the entire process and maintains momentum. We draw up a clear schedule, coordinate confidentiality, the provision of information, management presentations, Q&A sessions and proposals, and keep all stakeholders engaged. Responses to investors are clear and transparent. We identify bottlenecks at an early stage, ensuring there is time to make adjustments. Where possible, we maintain several serious alternatives. This strengthens our negotiating position and prevents unnecessary dependence on a single party.
We compare the proposals we receive. It is not just the amount and interest rate that matter, but also the term, repayment schedule, covenants, security, conditions for drawing down funds and future flexibility. Where necessary, we consult with our accountant, tax adviser, lawyer and other advisers. Ultimately, commercial agreements must be accurately reflected in the documentation and the funds must actually become available.
The quality of a financing arrangement is not determined solely by the amount available or the interest rate. Repayment terms, covenants, security, reporting obligations and the scope for business operations are at least as important. Kruger prepares for negotiations both substantively and tactically. We determine in advance what is essential, where there is room for manoeuvre, and which conditions might limit business continuity or future capacity. This means we do not merely react to proposals from financiers, but instead focus specifically on securing a comprehensive package that supports the strategy, business continuity and future freedom of action. In this way, we focus on the overall result.
We assess the full economic and operational impact of a proposal. In addition to interest, this includes additional costs, such as arrangement and commitment fees and early repayment charges. The internal efforts and costs required for periodic (covenant) reporting are also important in this regard.
Furthermore, agreements with the lender regarding investments, acquisitions, dividends, additional debt, collateral, guarantees and changes in control are important. The aim is to ensure sufficient headroom and clear agreements that are consistent with normal business operations. The company must be able to continue trading after closing, even if actual performance temporarily deviates from the forecast.
Negotiating from a position of strength requires facts, market knowledge and credible alternatives. Kruger systematically compares proposals, identifies discrepancies and highlights which points are commercially significant and which primarily have legal or operational implications. We use market-based benchmarks without losing sight of the company’s specific credit quality. Where multiple lenders are involved, we foster targeted competition and monitor the timetable. At the same time, we remain mindful of the relationship: a lender must not only demonstrate commitment today, but also be able to adapt constructively should circumstances change during the term of the loan.
Kruger compares proposals, highlights discrepancies and underpins the key negotiating points with facts, market knowledge and credible alternatives.
Once agreement has been reached in principle, we oversee the translation of the terms into a term sheet and binding documentation. Reservations, credit approval, due diligence, security and conditions for drawdown must be clear and workable. Together with you, we monitor the loan documentation and coordinate the practical closing.
In exceptional or complex situations, negotiations take on an extra dimension. In the event of liquidity pressure, an impending covenant breach or a special administration process, it may be necessary to agree on a waiver, standstill, covenant reset, term extension, temporary repayment relief or additional financing. In such cases, we carefully assess the position, security and interests of all stakeholders and work towards a solution that is feasible and has sufficient support. A convincing recovery plan, a transparent liquidity forecast and a realistic allocation of contributions are crucial in this regard. At the same time, we keep alternative scenarios on the table, so that time pressure does not lead to unnecessary loss of value or a one-sided result.
Partner
Senior Consultant
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