Capital Structure Analysis

Objective evaluation of debt capacity, leverage optimization, and refinancing strategy for cyclical businesses seeking to balance growth with financial stability.

What this service provides

Capital structure analysis examines your company's current debt position, covenant framework, and refinancing options to identify optimal leverage levels. We assess debt capacity under various operating scenarios and provide recommendations for capital allocation that balance operational flexibility with stakeholder requirements.

This service is particularly relevant when considering recapitalization, ownership transitions, significant capital projects, or covenant renegotiations. The analysis incorporates cycle-specific stress factors and lender expectations to ensure recommendations are both practical and aligned with market standards.

Core deliverables

  • Debt capacity analysis under multiple operating scenarios
  • Covenant structure assessment and headroom projections
  • Leverage optimization recommendations by cycle phase
  • Refinancing timing and strategy evaluation
  • Capital allocation framework development
  • Comparison to industry benchmarks and lender expectations

Who benefits from this service

Companies considering refinancing

Understand optimal timing and structure before approaching lenders.

Private equity portfolio teams

Assess leverage headroom and recapitalization opportunities across holdings.

Owners planning transitions

Optimize capital structure before sale or partial exit events.

CFOs managing covenant pressure

Develop proactive strategies for covenant management and lender communication.

Problems this approach addresses

Common challenges in capital structure management for cyclical businesses:

  • Leverage uncertainty: Difficulty determining sustainable debt levels when earnings fluctuate significantly across cycles.
  • Covenant vulnerability: Fixed financial covenants become binding during downturns, limiting operational flexibility.
  • Refinancing timing: Uncertainty about when to refinance and what terms are achievable given cycle position.
  • Capital allocation conflicts: Tension between growth investment, debt reduction, and owner distributions.
  • Lender communication gaps: Lack of objective analysis to support discussions with creditors during challenging periods.

How we deliver this service

Week 1

Current state assessment

Review existing debt agreements, covenant terms, and historical compliance. Analyze cash flow patterns and lender relationships.

Week 2-3

Capacity analysis and benchmarking

Model debt capacity under various scenarios. Compare leverage ratios and covenant structures to industry standards and market practices.

Week 4

Recommendations and strategy

Present findings with specific recommendations for capital structure optimization. Provide refinancing strategy and implementation roadmap.

Ongoing

Transaction support

Optional assistance with lender presentations, covenant negotiations, or refinancing execution.

Expected outcomes

Clients who complete this engagement typically gain:

Clearer leverage boundaries

Quantified understanding of sustainable debt levels across cycle phases

Improved lender relationships

More credible communication supported by objective third-party analysis

Strategic refinancing roadmap

Defined timing and structure recommendations for capital markets activity

Capital allocation framework

Systematic approach to balancing growth, debt management, and distributions

Interested in this service?

Schedule a consultation to discuss your capital structure.

Contact Us
Typical engagement
  • 4-6 weeks duration
  • 2-3 team members
  • Full documentation
  • Lender support option
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Build liquidity visibility and stress testing

Ready to optimize your capital structure?

Let's review your current position and identify opportunities for improvement.

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