To enhance investment returns, a portfolio company’s
capital structure is engineered to minimize initial equity
outlays. Substantial debt levels place a heavy cash flow burden
on the company and leave little cash for re-investment in
(if any) and tactical decision-making is oriented towards
inflating near-term revenues and cutting expenses
to enhance earnings and position the
company for a favorable exit.
direction and decision-making often create deceptive
growth that mask eroding long term business fundamentals.
Without a strategy for sustainable growth, a company’s
prospects and viability can suffer irreparably.