You never give me your money: The FM Business Leaders’ Round Table Debate (part II)

While several mds and ceos at this year’s event ​- held at the Eversheds HQ in London on Tuesday - cited positive relationships with banks, many had experienced difficulties when it came to accessing finance over the last 12 months.

Ian Blackburn, chief executive of AIM-listed confectionery and snacks firm Zetar, said “One of the biggest issues I had last year was securing funding for organic growth and for acquisitions on terms that were reasonable. I spent a lot of time looking for funding and it’s bloody hard. ​

 ​

“If you’re a growing business you need increasing working capital and I still don’t think we have got to a point yet as to how we will deal with the gap in funding for working capital going forward, particularly if you are with overseas banks.​

 ​

“Quite a few of us did succumb to the overtures of some of the Irish banks three four years ago and as those facilities come up to maturity you’ll find that’s not there."​

Funding more lofty growth ambitions​

 He added: “I would also like to think of myself as acquisitive, and having put the business on the growth phase organically again I have now got to find out how the hell I can get the funding to grow acquisitively.​

 ​

“I have targets, they have lots of value in them, but getting the equity value in the market, if you can’t do it with the stock market, do you deal with private equity? And their cost of capital is still high. These are some big issues we have to wrestle with if we’re going to be a growth industry.”​

Honeyrose Bakery boss Lise Madsen also raised the issue of financing during the debate, which brought together more than 20 mds and chief executives from the food manufacturing industry.

She said: “We need money to fund growth, but as an entrepreneur, you don’t always want to give away equity in your business​ [to a private equity firm] when you’re growing. We can borrow from the banks but it’s at a price.”​

Refinancing challenges​

Pasta King boss Howard Farquhar predicted that a lot of businesses that were coming up for refinancing this year would face challenges. Simon Pattinson, md at chocolate maker Montezuma’s, had managed to secure extra money from his bank, which had initially “refused point blank to give us any more money under any circumstances short of us selling limbs”​, but only when he was on the verge of signing up with another bank.

Meanwhile, New England Seafood International finance director Charles Noble said that while his bank relationships had remained strong and effective in recent years, he had picked up that there was a “shortage of decision-making” ​through contacts in other businesses.

Conversations with other finance directors in the food sector "seemed to suggest a transition from an old world where a relationship director would feel confident on getting a proposal past credit to a new world where credit committees have become increasingly discerning in their views​", he said.

 If you are a board level director at a UK food or drink manufacturer and are interested in attending our next round table event (provisionally scheduled for June in the north of the country), please email me at Rynvar.jngfba@jvyyvnz-errq.pb.hx​​

 ​​* For more coverage of the debate - which was sponsored by ​Eversheds, lean consultancy KM&T and foreign exchange specialist World First - see the February issue of Food Manufacture​ magazine.​​