Know thy banker

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Session recap

Viewing bankers as partners and vendors

The relationships between fast-growth companies and bankers these days could be termed stressed or even downright rocky, according to business leaders in the “Know thy banker” session at the Forum on Wednesday. But all agreed it’s vital to keep close ties to these key sources of capital.

“Get to know your banks before you need them,” advised Charlie Vogt, President and CEO, GENBAND. “These days, banks will do major due diligence for six months or longer before making a loan. So, establish a relationship with a bank well ahead of time,” he said.

Jeff Cheney, Senior Vice President — Finance and CFO, Kohler Co., said that Kohler has relationships with 16 banks around the world. ”We practice relationship banking, based on the geographic regions where Kohler is operating,” he said. “And it’s important that both parties have a long-term view of the relationship.”

Today’s relationships with banks are often stressed by current regulations, noted Rob Moore, President and COO, Big-D Construction. He said that Dodd-Frank and the overall regulatory environment have turned many banks into reluctant lenders. “The loan committee seems like the ‘no!’ committee,” he quipped. That’s one reason that many companies are forced to sell part of their companies to venture capital firms in order to fund their growth, added Vogt.

John Weber, President and CEO, Remy International, Inc., offered this warning: if you get overextended, “your banker can be your boss and dictate terms.” Weber said that it took several years to free Remy from a 17-to-1 leveraged position. His advice? “Find a bank where you view each other as being important.”

Cheney suggested viewing a banker as both “a partner and a vendor.” He noted, “We keep bankers at arm’s length and do get competitive bids. But, at the same time, we might go with a certain bank if they give better advice or have the geographic reach we need.”

Moore offered one final bit of advice: remember that banks can serve as good references for potential customers in your community. “We need banks, we love banks — but they can be frustrating at times when they don’t provide enough transparency into what they can and cannot do for us,” he concluded.

 Speakers:

Jeff Cheney photo

Jeff Cheney
Senior Vice President - Finance & Chief Financial Officer
Kohler Co.

Rob Moore photo

Rob Moore
President, COO
Big-D Construction

Charlie Vogt photo

Charlie Vogt
President & CEO
GENBAND

John Weber photo

John Weber
President & CEO
Remy International, Inc.

Moderator:

Jim Carter photo

Jim Carter
Senior Managing Director, Head of US Lead Advisory
Ernst & Young Capital Advisors, LLC