You really need estimates of revenues and expenses, looking out over a three- to five year period, to prepare budgets. People who have a good handle on their business generally have a feel for what their growth percentages will be and how they’re going to achieve those. What they can never fully know are what the market conditions will be.

For instance, some businesses go through cycles. But, whatever the situation, the important thing is that a company prepares forecasts. They need to roll those forecasts forward based upon current conditions as they change, so they’re prepared to either recapitalize the business — put in additional equity — or determine that they’re going to have greater borrowing needs — increase the debt. If either of these options aren’t available to you because banks believe you’re over-leveraged, you can pursue either additional investors or mezzanine lenders, which provide funds that are always subordinated to senior debt.
Sure. A number of companies with strong balance sheets are looking to acquire strategic assets. Whether you are seeking acquisitions or considering selling, a strong financial position will help you.

From a financial perspective, most deals will be successful or unsuccessful based upon the structuring of the debt and equity. There’s always a balance you have to strike. Banks will lend primarily based upon collateral, so some deals may not go through because the banks have cut back on how much they will lend on a transaction.

Look at how you’re going to structure the total needs of the business, between how much debt you’re going to be able to get from the banks and how much equity you can raise, either from yourself or yourself plus investors. If there is a gap, you can go to the mezzanine players, where the funds can be interest bearing and/or interest bearing plus some convertible securities.