Philosophy & Approach

What's the difference between an independent financial advisor and an investment banking firm?
Why is the independent financial advisor's approach and orientation superior?

An Independent Financial Advisor is a firm that is not affiliated in any manner with an investment banking firm (broker/dealer), other financial institution or investment manager. An Independent Financial Advisor (FA) is clearly an advocate for his/her client, and is accountable solely to the client. An investment banking firm, which commonly acts as principal in a transaction, has two clients: the health care organization, as borrower, and the investors. No investment banking firm can consistently satisfy both sets of clients over a long period of time.

The FA performs two major functions during the course of an engagement to arrange capital financing:

No Conflicts of Interest

First River Advisory is highly sensitive to the competitive environment in which most health care organizations operate, and to the proprietary nature of certain information. Accordingly, First River Advisory will not, except in extraordinary circumstances, engagements with competing organizations. When there is any doubt whatsoever, First River Advisory will solicit consents from the affected parties.

Because First River Advisory's clients tend to be weaker credits, the credit process is particularly challenging. Due to credit quality concerns among bond insurers, none of First River Advisory's clients have been able to qualify for bond insurance.

A client's Presentation of Credit Information may be used in rating agency applications, in proposals to credit providers and/or for the purpose of providing introductory information to investors in the high-yield bond market. It also evolves, with appropriate modification, into the "Appendix A" of an Official Statement. Frequently, once credit analysts will want to supplement their review of the Presentation of Credit Information with a site visit where they can meet face-to-face with representatives of the client's governing board, management, and, if a hospital, its medical staff.

In each case, First River Advisory ensures that its client's bonds can be marketed at the most favorable yields available in the market, by:

taking aggressive measures to ensure that investment analysts' questions are answered and their concerns allayed; and
closely monitoring the activities of the underwriter on the day the bonds are formally offered in the market.

Primary Disclosure

In tax-exempt financing, information concerning the health care organization is usually compiled in Appendix A to an Official Statement (OS) relating to bonds. The Appendix A evolves from the Presentation of Credit Information, which is drafted by First River Advisory on behalf of its clients. An Appendix A prepared by First River Advisory features three key characteristics:

First River Advisory employs a balance sheet management approach to the development of a client's Capital Plan. A more simplistic approach would be limited to addressing the "how can this project be financed?" question, usually the key issue that provoked management to contact a firm like First River Advisory in the first place. The balance sheet management approach entails the examination of numerous factors over a relevant planning horizon, say three to five years. In addition to the particular project requiring financing, First River Advisory delves into factors that are likely to impact an organization's balance sheet over this time frame: cash generation capabilities;

the routine capital budget;
other significant cash needs, such as supporting physician practices; and
investment policies.