Capital Structure Advisory

Offering strategic expertise to capital structure planning for 30+ years

/ FCA Registered

Reference: 729876

Who Are Mill Wood Finance?

Since 1999 we have been advising businesses on how their funding is structured at a strategic level, working closely with finance directors and leadership teams on debt positioning and capital planning.

Our Ethos and Service

We take the time to understand how a business is funded before recommending changes. We work independently of the lenders we place business with, and our capital structure advice is shaped by what the business needs, not the preferences of any single bank or funding provider.

Unlocking capital for your business.

At Mill Wood Finance, we advise established firms on how their funding is structured and whether that structure is still right for the current stage of the business. Capital structure planning is not simply about increasing or reducing debt.

It is about ensuring the right mix of borrowing, equity and retained earnings is in place to support investment while maintaining resilience when conditions shift.

We work with finance directors and boards to review how existing borrowing is arranged – looking at facilities, covenants, repayment profiles and shareholder positions. From there, we develop a capital structure that supports the day-to-day running of the business and gives it room to act when opportunities arise.

Capital structure explained

Capital structure refers to the way a business is funded through the combination of debt and equity it uses to finance its operations and growth. Debt includes bank facilities, loans and other forms of borrowing. Equity refers to shareholders’ capital and retained profits held within the business.

Every business has a capital structure, whether it has been designed deliberately or has simply evolved over time. The difference matters. A capital structure that has been planned and regularly reviewed will typically deliver a lower overall cost of funding and greater financial flexibility. One that has been left unmanaged can lead to unnecessarily high borrowing costs, restrictive covenants or an over-reliance on a single funding source.

For established enterprises in particular, capital structure becomes more consequential as the business scales. Hence, the importance of expert capital structure advisory services that are tailored to your requirements and future plans.

The trade-off in capital structure

Debt is typically cheaper than equity because interest payments reduce taxable profit. But borrowing also introduces fixed obligations, covenant requirements and financial risk. Equity provides flexibility and does not require fixed repayments, but it dilutes ownership and is generally more expensive over the long term. Capital structure planning is about finding the right position between the two for your specific business.

Optimal capital structure

There is no single formula that applies to every business. The right structure depends on the sector the business operates in, its stage of growth, the predictability of its cash flows and the objectives of its shareholders. The goal is to reach a funding position where the overall cost of capital is as low as it can be while the business retains enough flexibility to operate and grow without unnecessary constraint.

When should a business review its capital structure?

Existing facilities were arranged several years ago and no longer reflect the size or direction of the business
The business is preparing for an acquisition, a significant capital expenditure or a change in ownership
Borrowing costs have increased without being benchmarked against the wider market
Covenants have become unnecessarily restrictive
A lender has changed its appetite for the sector or reduced its exposure
The business is holding retained cash that could be deployed more productively

In many of these situations, an independent review uncovers value that has been left on the table.

How Mill Wood Finance can help you

1. Review

We review the full funding position of the business, looking at what facilities are in place, what they cost, how they are structured and whether they still fit.

2. Assess

Due to our advice being independent of any lender, we give an objective view of where the current structure is working well and where it could be improved.

3. Recommend

If changes are warranted, we set out the options in practical terms, covering what could be renegotiated with existing lenders, what should be replaced and where new facilities might add value.

4. Implement

We prepare the business case, approach the right lenders from our network and manage the application through to completion.

FAQs

What does a capital structure adviser do?

A capital structure adviser reviews how a business is funded and recommends changes that could reduce cost or better align borrowing with the commercial direction of the company. At Mill Wood Finance, we also manage the process of implementing any recommended changes, from preparing the business case through to securing new facilities with lenders.

What is the difference between capital structure planning and debt restructuring?

Debt restructuring focuses specifically on reshaping existing borrowing, whether that means renegotiating terms, consolidating facilities or moving to a different lender. Capital structure planning is broader. It looks at the overall mix of debt and equity in the business and considers whether that mix is right for the current stage of the company. Debt restructuring is often one part of a wider capital structure review.

Can a business have too little debt?

Yes. While excessive borrowing creates financial risk, being too conservatively funded can also hold a business back. If a company is sitting on retained cash or equity that could be deployed more productively through borrowing at a lower cost, it may be missing opportunities to invest or grow. Capital structure planning considers both sides of this.

How does capital structure affect the cost of capital?

The cost of capital is the blended rate a business pays across all of its funding sources. Because debt is generally cheaper than equity due to the tax deductibility of interest, increasing the proportion of debt can reduce the overall cost of capital up to a point. Beyond that point, the increased risk of financial distress pushes borrowing costs higher and offsets the benefit. Capital structure planning is about finding the position where the overall cost of funding is as low as it can be while the business retains enough flexibility to respond when it needs to.

Is capital structure planning only relevant for large businesses?

No. While it is often associated with large corporates, capital structure planning becomes increasingly important for successful firms as they continue to grow. Once a business reaches the point where it has multiple lending relationships, significant fixed assets or is planning an acquisition or expansion, the way its funding is structured starts to have a material impact on performance and decision-making.

Let's work together for your capital structure requirements

Whether you are reviewing how your business is funded or preparing for a specific funding event, we are happy to discuss your situation and outline how we can help. You can book a meeting directly using the calendar below, visit us at our Brighton office, call us on 01273 523690 or email [email protected].