“Houston, We’ve Had a Problem”
March 31, 2020
Dear clients and partners,
The global pandemic and a slowing economy can be worrying. The endpoint of these combined forces is indeed unknown. At Blacksail Capital Partners, part of the Garrington Group of Companies, we are taking necessary steps to minimize risk, and we hope that our business partners join us in doing the same. One thing that we do know is that many companies are likely to experience tighter working capital and other challenges – both ordinary and extraordinary. In order to limit this tightening and to be responsive to whatever situations arise, we need to reduce uncertainty through communication and teamwork. This will ensure the business continues to operate as smoothly as can be expected in the present environment.
Blacksail Capital Partners is led by an experienced team that has navigated successful businesses through economic uncertainty with many years of cumulative experience in entrepreneurial business, trade finance and capital markets. Our group continues to provide daily guidance on best business practices and forward-looking solutions. Reflecting our “people first” fabric, we have provided all employees with the opportunity – and resources – to work from home. This embraces social distancing techniques that are encouraged by healthcare officials and is the best course to ensure business continuity and service to our clients and stakeholders.
There is something powerful in adversity – it shines a light on weakness and allows for improvement. When times of challenge and uncertainty abate, the possibility of doing things better can always exist. The Blacksail Capital Partners’ spirit with which we are approaching the current market environment reflects many of the core values that we hold in high regard to service all our stakeholders.
“Houston, We’ve Had a Problem”
These immortal words heralded from the depths of outer space en route to the moon uttered by James Lovell, Commander of Apollo 13 (April 13, 1970), have become common lexicon for anything gone wrong. From a previous article about cash being king (if you have the cash, you can buy time, and if you have time, you can find cash), we can use this “Houston, We’ve Had a Problem” mantra in determining a go/no-go decision on any Asset-Based Lender (ABL) credit.
Asset-based lending is the business of lending money in an agreement that is secured by collateral such as inventory, accounts receivable, equipment, or other property owned by the borrower. If you are looking to provide credit, here are a few essential questions that you should ask yourself:
- Do you have adequate collateral? If no, then we have a problem. If yes, then proceed to the next question.
- Do you have good accounting systems to be able to report your collateral? If no, then we have a problem. If yes, then proceed to the next question.
- Do you have a workable business plan? If no, we have a problem. If yes, then proceed to the next question.
- Do you have a management team to be able to manage your collateral, report your collateral and execute the business plan? If no, then we have a problem. If yes, then what comes next?
If you answered yes to all of the above questions, you have the basic underlying premise to proceed with further due diligence, underwriting and possibly a commitment.
Blacksail Capital Partners has a suite of reliable financing solutions and expert support to empower companies towards achieving strong and sustainable growth. Count on expert support from start to finish.
* “Houston, we have a problem” is a popular but erroneous quotation from the radio communications between the Apollo 13 astronaut John (“Jack”) Swigert and the NASA Mission Control Center (“Houston”) during the Apollo 13 spaceflight, as the astronauts communicated their discovery of the explosion that crippled their spacecraft. The words actually spoken, initially by Jack Swigert, were “Okay, Houston, we’ve had a problem here“. After being prompted to repeat the transmission by CAPCOM Jack R. Lousma, Jim Lovell responded, “Uh, Houston, we’ve had a problem”. Since then, the phrase has become popular being used to account, informally, the emergence of an unforeseen problem.
For more information on Blacksail Capital Partners, please contact us.