Companies that want to grow reach financial limits at some point. Your 'house bank' will say stop at some point, and anyone who wants to go further must start looking for a second traditional or alternative banker.
External capital, for example from upcoming credit funds, can be the solution in that case. But, as Lonneke Arntz of Avaxa Debt Advisors recently told the Agro Business Club Westland (click here for the (photo) report): "You are buying flexibility, but that comes at a price."
In 2016, Lonneke, together with partner Martijn Mouwen, founded Avaxa Debt Advisors and has since advised around thirty companies in the process of acquiring financing. Advising, because Avaxa does not take care of funding themselves. "We help acquire financing and recently we see that more and more (family) companies with international ambitions have additional financing needs, also in the agricultural and horticultural sector".
Large supply offers opportunities
RedStar, Plantise and Looye were among the companies who have made use of the support of Avaxa in acquiring funding. And all this in a financial market which has such a low, and still decreasing interest that there is a lot of capital in the market and much liquidity.
Because of this, not only banks, but also alternative banks are available for financing. This offers opportunities. Lonneke: "There is a lot of supply, much freedom of choice, so those who play the game well, can get good conditions."
But how do you play this 'game' exactly? Lonneke: "To get the margin of a financing down, most companies do not need an advisor. But to come up with a financing structure which matches the ambition of the company that leads to a financing package with attractive terms and conditions, requires a bit more."
Look beyond the 'house banker'
From the moment the house banker cannot go any further, other affairs come into play. They cannot go further if, for example, the total debt package of more than 50 million becomes too high for one bank to bear and/or the leverage ratio becomes too high (the ratio between the total debt divided by operational profitability). At that moment, a company will be treated differently with different dynamics and financing will require other and (even) more paperwork.
Sometimes, there is also private equity required, but there are plenty of other options, Lonneke knows very well. "Both for larger and smaller companies, factoring can be attractive, in which an entrepreneur transfers his invoicing and debtor risk to a specialized company, the factoring company. In exchange for a fee to this company, the entrepreneur immediately gets his money."
According to Lonneke it is always a good idea if companies ask themselves whether, if they want to grow in the future, their house banker will also be their bank in the future. "Can a bank also finance if the growth takes place in Russia, the Middle East or the United States? And, do you really want to be dependent on one banker?"
'Relation check'
More and more companies ask themselves these questions and look to other financing options, fueled by trends in the market such as scale enlargement, internationalization and professionalization. On the other hand, bankers also look closely to the agricultural and horticulture sector. "Bankers love guarantees, but also know there will always be risks such as fluctuating tomato or energy prices and are prepared to accept this, certainly for well performing, strong parties."
It offers opportunities, but Lonneke is not keen on too euphoric thinking when it comes to financing. "There is also a downside to extra financing. You are suddenly confronted with another type of person across the table and if your company should face adversity, it can be tough. Not a problem, but good to keep in mind."
Any other tips? Lonneke: "Yes. Always perform a 'relation check' at a take-over, due diligence in technical terms. Also important when companies already know each other well, for example to discover hidden defects at an early stage. And you can discover if the DNA of both parties match."
You can view the (photo) report of the Agro Business Club Westland and the practical experience of Koen Brabander of PB tec with private equity here. The story told by Leonard van Loon and Jelmer Methorst of NPM Capital during the event will follow in one of the upcoming newsletters.
For more information: 
Avaxa Debt Advisors
www.avaxa.nl
info@avaxa.nl