One of the worst credit crunches in decades is posing a challenge for ISOs seeking outside investment.
The availability of financing tightened dramatically after the Bear Stearns takeover in March, reports Kurt Strawhecker, managing partner of the Strawhecker Group. At least one investment firm preparing to make a major equity investment in an ISO pulled out at that time, he reports.
While deals are still possible, the price of a cash infusion has risen. Investors now demand either higher interest rates or a bigger equity stake to justify their investments, and they’re more selective about
the projects they will consider, Strawhecker reports. “ISOs need to pick the right time to raise funds, and now is not the right time unless funding is absolutely critical,” he observes.
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