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The conversation opened with a blunt reality check: this is a difficult point in the Australian business cycle. Interest rates have stayed higher for longer, cost pressures are still biting SMEs, and refinancing has become harder as bank credit turns increasingly selective. The old assumption that there will always be an easy “takeout” is no longer safe.

For brokers, that shift changes everything. Deals are no longer assessed only on serviceability today. They’re being judged early on a tougher question that lenders, valuers and restructuring advisers are all asking sooner than ever:

What is the actual exit? Who will execute it? And what happens if it doesn’t go to plan?

Our Panel

Nick Samios, Director at Hermes Capital, Host and Facilitator

Ian Hyman, CEO, Hymans Valuers & Auctioneers

Richard Lawrence, Director, Mackay Goodwin

The emerging problem: exits that aren’t exits

A major theme was the rise of “pass-the-parcel” refinancing, where borrowers jump from lender to lender, increasing leverage, stretching asset values, and pushing LVRs just to keep moving in the short term. It might keep the lights on for a while, but it often erodes equity until the music stops and the borrower has nowhere left to go.

That’s why “selling the exit” isn’t just a credit requirement. It’s about protecting the client’s net asset position and avoiding value destruction disguised as a refinance.

Three perspectives on what makes an exit credible

1) The private credit lender: credibility, de-risking, and a real Plan B

Nick Samios (Hermes Capital) framed exit planning as central to private credit, especially in special situations lending where enforcement is not hypothetical. The key message was simple: the higher the leverage, the more the exit matters.

He outlined a common broker assumption that often disappoints lenders:
“We’ll refinance to a bank in 12 months.”

Credit committees will ask: if a bank will refinance it later, why won’t they do it now? What will change to de-risk the file? What’s the measurable plan to reduce LVR, improve reporting quality, stabilise performance, or remove the barriers the bank is currently saying “no” to?

And critically: what is the fallback if the refinance fails?

Nick also warned about deals where the “exit” simply pays out the bank and the ATO but leaves no runway for the business. In that situation, the refinance isn’t rescuing the client, it’s rescuing the incumbent lender while the business remains undercapitalised.

To structure exits properly, he encouraged brokers to think in clear pathways, with Plan A and Plan B visible upfront:

• Mainstream refinance (only credible if the de-risking steps are defined)
• Asset sale (credible only when evidenced: listing, agent, campaign, and ideally an auction date)
• Turnaround through trading (a real operational change, not just higher-cost funding)
• Equity injection (rarely realistic if it’s simply to pay out debt)
• Sale / M&A (only credible if performance and information can withstand due diligence)

2) The valuer: the “dream-time effect” and the time trap

Ian Hyman (Hymans Valuers & Auctioneers) highlighted two recurring problems that can destroy exit planning:

Unrealistic value expectations and unrealistic timing.

He described the “dream-time effect”, where borrowers believe their assets are worth far more than the market will pay, or assume funding processes will move at the speed they need. In practice, when distress is present, borrowers often call far too late, expecting major valuations in days when the reality is measured in weeks, and major lender processes in months.

Ian’s warning to brokers was practical:

• Know your funders, their criteria, geography, asset appetite and true timelines
• Use your valuer as a partner early, not at the last minute
• Understand that market value and forced-sale outcomes are not the same thing

A key point that resonated was how quickly value can collapse when time compresses. Many lenders assess LVRs on market value, then recover on a rapid-sale basis, which can “tank” outcomes. The choice of selling agent, the sale method, and the realistic selling period can materially change the result.

He also explained why some assets are “technically valuable” but hard to realise. Mobile assets are often more liquid. Heavy manufacturing equipment can be expensive to uninstall, transport, and prove operational, meaning a million-dollar machine can become worth a fraction once dismantled.

3) The restructuring adviser: evidence-based exits, not optimism

Richard Lawrence (Mackay Goodwin) brought the restructure lens: an exit stops being credible the moment it becomes wishful thinking.

From that side of the fence, the test is whether the plan is evidence-based. Forecasts must be grounded in contracts, customer reality, and actual operational capability. He also emphasised that the ATO position is routinely understated. Lodgement history, superannuation and SGC risk, and the likelihood of enforcement action can derail exits quickly, including after a refinance if the true position isn’t surfaced early.

Richard outlined early warning signs brokers should watch that often signal an exit is already at risk:

• repeated refinances without stabilisation
• creditor ageing blowing out
• legal demands or court action
• tax and super not genuinely up to date
• loss of key customers, suppliers, or staff
• management instability
• asset values weakening due to industry downturn or saturation

Private credit, he noted, plays an increasingly important role as banks retreat from complex situations. It can provide breathing space, fund a DOCA, support an SBR contribution, or give working capital runway. But it becomes dangerous when it is used to plug ongoing operating losses without fixing the underlying business.

The hidden deal killer: poor information

A recurring theme across the panel was information quality. Nick described how deals often arrive with minimal detail and a reluctance to ask hard questions, because no one wants to “lose the deal”. But weak information is often the reason the business is in trouble in the first place, and it undermines the credibility of any refinance-based exit.

Ian reinforced that in business sales or equity pathways, poor financials can destroy outcomes. If numbers can’t be trusted or the business has been run like a personal bank account, buyers and investors can’t price risk and exits collapse.

The broker’s real opportunity

The seminar closed on a constructive point: in this market, the broker’s role is more valuable than ever.

The win is not simply getting a deal approved. The win is guiding the client away from serial refinancing that strips equity, and toward a structured plan that protects value and leads to a bankable outcome. As Nick put it, a genuine success story is when private credit becomes a bridge, and the client eventually exits to a bank because the business has stabilised.

In a higher-for-longer economy, selling the exit is what allows the deal to proceed, and what protects the client when it does.

Watch the full recording to learn more.

Interested in future seminars by Hermes Capital?

Check out our upcoming events here.

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