Private Equity/Venture Services

According to a recent survey of middle market companies in the southeastern United States, there may be a bit of a debt maturity crisis approaching.  AlixPartners conducted a study of 142 companies and found that there is approximately $6.3 billion in debt scheduled to mature in 2010.  In 2009, those companies had overall debt of $64 billion but generated revenue of only $59 billion.  This, along with a general shortage of working capital within the companies, points to a strong need for credit availability this year.

Now, we all know that the credit markets have opened up a bit.  Both 2009 and early 2010 have certainly been better than 2008.  However, they haven't opened up that much.  As a result, working capital management will be more important than ever as companies try to weather this storm.  According to the AlixPartners study, companies included in the study had only 8.9 days in working capital coverage.  The study stated, "Like the old saying goes, 'cash is king' – and both generating and husbanding cash through all means possible is going to be key for companies in this region this year, starting with having cash for debt service.  That's the only way to make sure this debt powder keg doesn't turn into a bomb."