Recurring Net LossesSustained multi-year net losses erode equity and reduce internal capital available for reinvestment. For an investment holding company without operating revenue, persistent losses increase dependency on successful exits or external funding and heighten the long-term risk to shareholder capital.
Negative Operating Cash FlowRecent cash burn reduces financial flexibility: negative operating and free cash flows force reliance on portfolio monetizations or financings. Without recurring operating income, ongoing negative cash flow over months could necessitate dilutive raises or asset sales, undermining long-term strategy execution.
Execution & Regulatory Transaction RiskCease-trade events and tax complications on potential deals are structural execution risks for a merchant bank. Such regulatory or transactional impediments can delay value realization, depress valuations of holdings, and add uncertainty to NAV recovery timelines, affecting long-term returns.