The news of BBVA’s hostile takeover bid for Banco Sabadell has once again raised alarms about the high level of banking concentration occurring in Spain and the negative effects it may have on the business sector of our country. The financial function of a company plays a crucial role in this scenario, facing the challenge of managing these strategic changes effectively.

The bank takeover will surely alter the financial landscape for the client companies of the affected entities. These events lead to a consolidation in the banking sector that can result in fewer financing options for companies. Moreover, it is more than likely that the merged entities will choose to reduce their risk exposure by reevaluating their credit portfolios or modifying existing financing conditions. Given this situation, it is vital that the financial function of the company is prepared to act proactively.

Diversification of Financing Sources

Diversifying financing sources is a fundamental strategy to mitigate the risks associated with banking concentration. Companies should consider a broader spectrum of options, including not only traditional bank financing but also alternatives such as debt funds, fintech platforms, specialized financing in factoring or leasing, and private equity solutions. This diversification helps reduce dependency on a small number of banks and offers greater flexibility in capital management.

Anticipation of Changes

Anticipating market movements and trends in banking consolidation is another key component. Companies must constantly monitor the market to foresee future takeovers and understand their possible impacts. Scenario analysis and financial planning must incorporate these possibilities, preparing the company to act swiftly in the face of imminent changes.

Partnership with Experts

In these times of uncertainty and financial complexity, partnering with a consultant specialized in corporate finance is more important than ever. An expert consultancy can provide the necessary market intelligence, as well as strategic and operational advice to navigate the challenges presented by bank takeovers. From evaluating current financing conditions to searching for viable and sustainable alternatives, a debt advisory expert like Altria Corpo can play a decisive role in optimizing a company’s financial structure.

In summary, effectively managing a bank takeover from a company’s financial function requires proactive planning and a well-defined strategy. Diversifying financing sources, constant market monitoring, and collaboration with specialized debt advisory consultants are crucial components to ensure that your company not only manages but also benefits from the constantly evolving dynamics of the banking market. At Altria Corpo, we are prepared to help companies navigate this complex environment with expert advice and customized solutions that will protect and enhance the financial health of your business.

 

Altria Corpo has just celebrated its tenth anniversary, and we wanted to show in a video what our values are and how we help companies to project the best possible image in the financial market and to obtain the most suitable solutions for their financing needs.

In the video, the CEO of Altria Corpo Albert Gumà reflects on the importance of choosing a financing advisor who knows the company in depth and at the same time the solutions offered by the financial sector, in order to be able to find the ideal instrument that meets the financial needs of each company.

 

Ramiro Lama, partner and head of financing at Altria Corpo, explains how in recent years the reduction of banking institutions has been combined with the increase of alternative financing solutions, expanding the possibilities for the company to open its liabilities to non-bank suppliers.

 

Antonio Llera, head of singular operations, and Jesús Llurba, consultant in the corporate area, describe the process of getting to know the client’s reality and the search for all possible solutions, in order to configure a tailor-made suit for each company. We also align ourselves with the client’s objectives, linking most of our fees to the achievement of this financial solution.

 

Eloi Noya, managing director, describes the wide variety of companies that can find in Altria Corpo their ideal partner in the search for financing for their needs. From companies expanding their markets or wishing to increase their production capacity, to companies that for various reasons cannot find the right answer to their projects in their usual banks.

 

Finally, one of the companies we have advised, Optral, through its CEO Joan Martín, tells us how Altria Corpo has helped to discover new financing channels for the company and its high level of satisfaction with the solutions found, which, as they say, the company could hardly have achieved on its own.

 

As Jesús Llurba ends by pointing out, “our greatest satisfaction is to make possible what our client, at the beginning, thought was impossible“.

In a previous post we presented the sale and lease back as an operation that provides liquidity to the company. In this article we will assess its undoubted advantages and also some of the disadvantages it may have.

Advantages of sale and leaseback

Let us remember that the company that carries out a sale and lease back with a property it owns obtains several advantages:

– It obtains immediate liquidity derived from the fact that it receives the price of the sale of the property. This liquidity can be used to reduce existing debt or to undertake new investments.

– You can continue to occupy the property, no longer as the owner but as a tenant, so you can continue your business without having to move.

– You will have the option to repossess the property if you exercise the purchase option.

– There can be a balance sheet improvement as a fixed asset is converted into cash, which can be beneficial to the perceived financial health of the business.

Disadvantages of sale and leaseback

In addition to these advantages, there are also some disadvantages to be considered in this type of transaction:

– Long-term cost: although sale and leaseback provides immediate liquidity, it usually entails a higher long-term cost than maintaining ownership and financing the asset through other means.

– Loss of ownership and inability to benefit from future appreciation of the asset.

– The lease resulting from sale and leaseback ties the company to a long-term contract, which may limit its operational and financial flexibility. If the company’s needs change, it may find itself tied to an asset that no longer fits its operations or strategies.

– The sale and leaseback process can incur significant transaction costs, including legal fees, valuation fees and other administrative expenses. These costs should be considered when calculating the net benefit of the transaction.

 

In the third and final article on sale and leaseback, we will discuss the details and operation of sale and leaseback transactions.

The results of the Barometer developed by Altria Corpo and the IEF reveal a tightening in the credit market for companies and an increasing search for fintech solutions and alternative financing. 

 

On February 7th, the results of the 4th edition of the Business Barometer of Fintech and Alternative Financing, conducted by Altria Corpo in collaboration with the prestigious Institute of Financial Studies (IEF), were published. This Barometer periodically collects the opinions, personal experience, and expectations of companies and providers of business financing (both banking and alternative) regarding credit granting policies, and especially the knowledge and use of fintech and alternative financing by companies.

In this 4th edition, whose surveys were conducted between October and December 2023, there is a notable increase in the difficulty of accessing bank credit. Up to 52% of companies believe that access to bank financing was difficult or very difficult, compared to 44% the previous year. Pessimism also continues regarding the possibility of banks mobilizing credit for 2024. 42% of companies believe that no bank will mobilize, and the banks themselves do not foresee an increase in lending: 30% believe that no bank will mobilize credit, and 70% believe that only some banks will do so.

The degree of knowledge about alternative financing among companies is consolidated around 80%, and 48% of companies have used some form of non-banking financing solution, with factoring and leasing being the most used instruments. As for fintech, a subgroup of alternative financing characterized by the use of technology and online platforms, the degree of knowledge among companies is around 50% and its use, however, is reduced to 22%, with invoice advance being the most used fintech product.

The outlook for 2024 is somewhat gloomy for companies. Banks and alternative financiers foresee continuing to raise interest rates and further tightening credit granting policies. Faced with this, the percentage of companies that need to seek financing during this year exceeds 75%, and up to 54% of companies claim they will seek alternative financing sources to cover this shortage of bank credit.

You can see the main results of the Barometer in the link:Resultados Barómetro Financiación Otoño2023

Click here to access the video presentation of the Barometer.

 

 

 

At times, companies require liquidity to tackle new investments or to restructure a liability with an excess of short-term debt. These companies often fail to secure this additional financing from their usual financial institutions, which would help them resolve these complex but non-critical financial situations.

When a company in this situation owns a property where it conducts its business, one possible solution is sale and lease back. This type of transaction, also known as lease-back or retroleasing, involves selling a property to an investor followed by a long-term lease of the same property, usually through a rental contract of between 10 and 20 years.

At Altria Corpo, we have helped some clients obtain liquidity through this method. In recent months, we have various examples of clients for whom we have secured several sale and lease back transactions. Let’s look at some recent successful cases to understand how it works and how it has helped the company overcome this difficult time.

 

A company from the Community of Madrid in the industrial sector, with 30 years of history, faced bank loans that represented an excessively high debt service. Despite increased sales and the quality of its clients, the banks did not offer additional financing or allow for extended terms. Altria advised them by structuring a sale and lease back operation using one of their industrial warehouses, which was owned and had a small outstanding mortgage. Altria found a buyer, an alternative financing company that acted as an investor, purchasing the industrial warehouse for 1.75 million euros and leasing it back to the same company for a renewable term of 10 years, with a purchase option after 10 years. Thus, the company did not have to vacate the sold property and retained the right to continue using the space through this rental contract. This provided them with immediate liquidity resulting from the sale.

On other occasions, sale and lease back provides liquidity for the expansion of the business itself. This was the case for a Catalan company, also in the industrial sector like the previous one, which wanted to serve new clients demanding higher production. The working capital and some fixed asset investment needed to undertake this project could not be financed by their institutions, as their level of indebtedness was already too high for them. In this case, the best option was also a sale and lease back on their main industrial warehouse, and the operation generated liquidity of 3 million euros for the procurement of raw materials, increased working capital, and enhanced production capacity, with which they can grow in sales and profits in the coming years.

Therefore, sale and lease back should be seen as a financing operation that, in certain circumstances, is the best option for the company.

In the following post, we will delve more into how sale and lease back transactions are structured.