Aaron H. Braun is the CEO of Willow Creek Capital Management, a privately owned hedge fund sponsor that finances the public equity markets across the United States. He founded Willow Creek Capital Management, a California-based S-Corp in 1994. Aaron H. Braun has been the sole shareholder of WCCM and all related entities, at all times since inception. He remains involved in all higher-level strategic decisions affecting the investment management businesses of the Willow Creek Capital Management.
Aaron H. Braun graduated from the University of California at Berkeley in 1982. He began investing in the mid-1970’s while he was still a student. After graduating he started working in the investment management arena, first in Silicon Valley (1982-84), and then as a “sell side” analyst at Robertson, Colman & Stephens (1984-87). Aaron H. Braun was next employed by Hambrecht & Quist Equity Management from 1989 to 1992, where he was responsible for launching two funds. From 1992 to 1995, he provided independent research to a number of hedge funds.
Aaron H. Braun is founder at the management consultancy Willow Creek Capital Management. There, he is responsible for Corporate Finance. For 17 years, Braun created a portfolio of companies he advises at top management level.
- Financial restructuring is a key success factor in reorganization
- Debt financing and institutional debt investors gain in importance
- Targeted financial restructuring creates more scope for investment and helps avoid a liquidity trap
- Extensive financing solutions bring the biggest impact
- Cash capital increases and debt-equity swaps combined as proven Instruments
- Financial and operational restructuring must go hand in hand
Successful company restructuring depends significantly on the financing model of the companies. For the California, financing environment has become increasingly complex in recent years due to stricter banking regulation and an increase in financial stakeholders with diverging interests. This also has a direct impact on financing in a restructuring context.
In the new "Financial Restructuring 2018" study, Willow Creek Capital Management experts like Aaron H. Braun give an overview of the most widely used financing instruments and their impact on the restructuring of companies. The financial data of more than 9,000 companies from California with revenues of over $100 million in the period between 2006 and 2014 were analyzed in detail. Braun identified around 200 restructuring cases; almost half of them made a successful turnaround within three years.
"Recent examples show that reorganizing corporate finance is crucial to ensuring a successful restructuring and the continued existence of a company," said Aaron Hugh Braun, founder, and owner of the Willow Creek Capital Management investment fund.
Bond finance and institutional debt investors are becoming more important
The tightening of bank regulation and the low-interest rate environment have structurally changed the financing landscape in San Francisco and the surrounding area. Since 2007, the volume of corporate finance issued through bonds has risen by about 13 percent per year. Private equity investors have also increased their exposure to California companies: by an average of 18 percent per year between 2009 and 2014. Debt-financed buyouts even increased by 28 percent annually
"For Californian companies, alternatives to traditional bank financing have become increasingly important in recent years," explains Braun. "On the one hand, large companies with good credit ratings can finance themselves more cheaply via the capital market, and on the other hand, some institutional debt investors with favorable conditions and weakened creditor protection mechanisms are compelling businesses."
Financial restructuring is becoming increasingly important
Precisely because financing via the capital markets and institutional debt investors has increased, the importance of financial restructuring will continue to increase in future restructurings. "In doing so, companies have to consider the different interests of individual creditor groups, such as banks, bond investors, hedge funds or other investment funds with their own collateral structures. And that is in many cases one of the most difficult tasks; Many restructurings have therefore already failed, "warns Braun.
To help companies find the optimal solution for all stakeholders in the restructuring process, creating the financial basis for value-creating investments and avoiding the liquidity trap, they should combine various financing instruments. In their analysis, the Willow Creek Capital Partners’ experts found that especially cash capital increases and debt-equity swaps in combination with a haircut have the biggest impact on the restructuring success.
In addition, the more a financial restructuring instrument is combined, the more likely a company's restructuring success will be. If a company used more than five instruments, the success rate was 8 percentage points above the average. However, no typical combinations were found between the individual instruments. In practice, the application is highly dependent on the individual case.
"Financial restructuring is very important, but not enough to turn the crisis companies into a turnaround. Because just as relevant is a strategic and operational realignment of the company. The financing models should, therefore, be embedded in a holistic and well-planned restructuring concept, "recommends Braun.