Capital Reserve Planning

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Most companies carefully measure the timing and magnitude of future capital claims.  During periods of sustained profitability, these claims can generally be satisfied on a pay-as-you-go basis using annual free cash flow. However, the long-term sustainability of any company can be threatened by a change in business conditions caused by a recession, project challenges, or shifting competitive dynamics.  While certain risks can be mitigated through structure and innovative design, an appropriate funding vehicle can often lower a company’s risk profile and help ensure its long-term sustainability.

  • For the privately held company, we conduct a thorough assessment of ultimate ownership continuity objectives, alternative legal structures, capital allocation strategies, and projected liquidity needs. This analysis provides stakeholders with an informed view of the financial impacts of various strategic paths and assists in developing funding and capital reserve strategies to achieve the desired end in mind.
  • For an ESOP-owned company, the repurchase obligation (RO) is a unique claim on future cash flow.  We help our clients hedge against this long-term risk by integrating the projected RO liability into a long-range financial forecast and procuring an efficient funding vehicle.
  • For banks and insurance companies, the impact of post-retirement benefit obligations (both qualified and non-qualified) can be effectively mitigated using Bank-Owned and Insurance Company-Owned Life Insurance vehicles.

Chartwell’s approach results in a dynamic, interactive analysis that provides decision makers and fiduciaries with a robust and relevant analysis, and an informed view for making long-term capital allocation decisions.

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