Plus a good capitalization plan can allow the partner group to focus on consumer service and new business development, rather than draining personnel resources on figuring out how to meet the weekly bills. I know from experience. Before I could tell you logically how important a capitalization strategy was, but now I know from personal experience. In a properly capitalized firm, that time can be used more profitably - for client work or to market the firm and create business. Tight money is going to force more and more firms to take a look at the capitalization question, according to Evancho.
Lenders now see the risks of greater competition and demands for better prices.
Michael Cauchi, vice president of private lending for Comerica in Southfield, disagrees. He sees no lack of money for firms. Most of the loan agreements his bank makes to firms are backed by personal guarantees against the deep pockets within the shareholder group. Those are all important questions, says Evancho. He points to the scenario of a firm where a rash of defections breaks out just after three senior shareholders have borrowed against a credit line.