Corporate credit
Debt, used as the right tool.
Since the Dutch East India Company issued the first corporate bonds in the 1620s, credit has financed many of society’s greatest endeavours. Too much debt is dangerous; too little can mean a company is leaving opportunity on the table.
The right tool for the job
Like any tool, debt builds when it is handled well and does damage when it is not. The questions we ask are practical ones. How long is the term: a short-term bill, a ten-year note, a thirty-year bond? Is there a sinking fund for repayment? What are the covenants? Is it secured, and where does it rank against debt already in place?
We use corporate credit to improve profits and to finance three kinds of situation.
Operations
Whether a company makes a product or provides a service, there are times when funding ongoing operations with short- or long-term debt makes sense. What matters is that the capital produces enough cash flow to cover the debt service comfortably, with a clear plan to retire it.
Expansion
Borrowing to grow works when planning and execution are strong. A poor manager can waste a large loan; a great one can do a lot with a little. We look at how efficiently new revenue is being generated, what new customers cost, and which costs fall away as the business scales.
Acquisitions
Buying assets, or whole businesses, with debt is common and often strategic. The leveraged buyouts of the 1980s were controversial, but they brought a discipline to the capital markets that still rewards healthy, well-run companies. Debt-financed acquisitions are one of the tools we know well.
Interested in working with Taurino?
We invest our capital alongside companies whose vision and goals are aligned with our own. Get in touch to see if we match up.