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Business Growth Strategies

 Your bank as a source of strategic and capital structure advice

6 Minute Read

Paul A. O'Mara

Managing Director, Regional Manager

Orange County Commercial Banking


We’re at a point in the business cycle—with merger and acquisition activity at record levels—where companies that have never considered engaging in a sale or acquisition process are pondering strategic alternatives. If that’s what’s happening at your middle-market business, here’s an important question to consider:

Are you working with a bank that can provide the strategic and capital structure advice you will need to grow or sell the business?

Traditionally there haven’t been many financial institutions willing and able to offer that level of thought leadership to middle-market clients. So, continuing into 2022, how do you determine if your current or prospective bank can provide you with timely advice?

What kind of advice do you need?

For starters, you will need strategic advice to help you figure out what you should buy (or continue to own and run) and how to pay for it.

The ideal bank to provide such advice has an approach that emphasizes learning about your business and current strategy, including your positioning, outlook, concerns and the opportunities you have identified. Ideally, you want a team of bankers who will engage you in a series of conversations in which they listen, ask questions and gently challenge you. Then, once they have the context and have established a dialogue with you on strategy, they can offer perspectives, advice, introductions and, ultimately, financing to support the execution of your chosen strategy.

In addition, you want bankers who can help you step back and think about your capital structure (both existing and potential) in context. You will need advice on how to balance debt and equity, alternative capital types that might be available, and how best to harness capital to benefit from an opportunity or solve a problem. Discussions with your bankers should cover the suitability, relative merits and possible shortcomings of particular types of debt and equity capital, in the context of your business’s unique situation.

Once you settle on an approach, you want a bank that can engage its product teams to execute the transaction, whether on its own, with the participation of other local institutions, or in the syndicated debt, bond or equity market.

Evaluating a bank’s advisory capabilities

Here are some questions to ask banks to gauge whether they can offer a high level of thought leadership:

  • Does the bank have a dedicated corporate advisory team? What corporate finance experience do team members have? It’s helpful to have advisors with investment banking backgrounds and experience buying and selling companies and raising various layers of capital from senior debt down to equity.
  • Can they offer your finance team a capital markets “teach in”? This could be a business school level presentation, informational and broad, covering debt and equity capital markets from asset-backed loans to public equity, including market dynamics, requirements and potential challenges.
  • Can they counsel you on your acquisition financing capacity? You want a bank that can assess your capacity to finance various acquisition scenarios with debt, and review potential acquisition targets with you.
  • Can they walk you through debt financing alternatives? Let’s say you are considering transitioning from a sole-bank financing relationship that you have outgrown. Does the prospective new bank have advisors who can sit down with you to explain and execute on your debt financing alternatives?
  • Can they advise you on transaction structuring? For example, can the bank counsel you on how best to structure an arrangement with a private equity firm to partner in an acquisition?

Solving problems or selling you something?

While the M&A market will likely not repeat lasts year’s level, it is expected to remain strong and companies of all sizes will be looking to make moves to grow or sell their businesses. Middle-market companies face a challenge in finding a bank that can help them navigate the corporate finance playing field.

In this environment, it pays to have a bank capable of engaging you in wide-ranging discussions about industry dynamics, strategy and capital structure alternatives. Through these discussions you can gain insights that can help your business grow efficiently; gather information to make well-advised, informed choices; and approach strategic alternatives with conviction.

When choosing a bank, pick a capital markets savvy institution that will listen to you and help you maximize value.

It boils down to this: You want a bank that can demonstrate it’s focused more on helping you achieve your strategic and financial objectives than on selling you something.


The talented team of Union Bank Commercial banking professionals is committed to addressing the unique needs of your company at every stage of its evolution. For more information, please visit the Union Bank Commercial Banking Group.

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