Latest news

Francisco Camacho’s presentation on patrimonial equilibrium and family businesses

The necessity of restructuring and elements to take into consideration

The Founder and CEO of Akerton Partners, Francisco Camacho, attended the Family Forum on the 2nd of July in Madrid.

During his presentation, Camacho spoke about the reasons why a business has to restructure its equity or debt. He believes that “we have to dedramatize having to restructure a company’s debt or capital”, because “every business has to”. What’s more, “large ones do it every year, with the IBEX 35 on top of the list”.

Due to the crisis in 2008, distress and catastrophe have been associated with restructuring, but this is not always the case. The reason for this perception is that restructures began within the real estate sector due to a lack of liquidity (assets weren’t being sold, and this caused disequilibrium owing to the absence of cash flows).

The reasons behind a rebalancing are varied. The rebalancing of equity structure in a company may result from its smooth functioning; however, there are other causes of a rebalancing that result from a more negative situation, such as a company being on the brink of bankruptcy.

The first type includes acquisitions (inorganic growth), productive or commercial investments that cause organic growth, the utilization of a favorable economic environment (a decrease in interest rates allows companies to lower their interest on debt) etc. Ultimately, broadening and strengthening the business model in a situation of economic strength, both internal and market based.

Within the not so positive reasons for the re-equilibrium of equity/debt structure in a company we find:

  • Excessive outgoing cash flow on the generated operating cash flow, unbalanced with weak financial structure.
  • Investments made with negative returns.
  • Non recurrent losses due to external factors, such as a downturn in the market or tensions in financial markets.
  • Overstock and poor working capital management.
  • Confusion between working capital and investments maintained through time that resembles CAPEX.

Another issue that restricts cash flow generation is the allocation of generated resources or activities that aren’t core to the business such as real estate investments (hotels, wineries, etc.) Generational changes sometimes distance the family company from its core business.

In essence, the financial re-equilibrium has to take place when the use of financial instruments within reach of the company create a temporary solution and it, maintained over time, creates a disequilibrium on the balance sheet structure.

Basic fundamentals to take into account when we face capital restructuring

  We must consider two fundamental issues:

  • The maximum capacity of indebtedness in a company is the present value of the cash flows (adjusted for debt) during the life of the loan.

For those estimations we have to consider: the need of constant use of resources while not forgetting the necessity to reinvest and maintain balance between generated cash flows; what has been invested and the distributed dividends; what is held in the balance and the company’s indebtedness.

  • Debt structure. The financial structure has to match the type of business. It is different for industrial or retail companies, for example, and there are also differences depending on seasonality. Each company needs a different structure with separate financial products and deadlines.

Long-term investments should be financed with long-term debt. Never should short-term debt be used for long-term investments.

In addition, we should take into account the maturity of the debt. Debt cash flows should be aligned with operative cash flow generation, as well as other cash inflows and outflows.

In conclusion, the President of Aketon highlighted that when cash inflows are higher than outflows, the company has economic viability and a viability plan can be designed.

Borja Hernández

In 2008 he began his career by joining the Cajamar bank as a private banking manager. In 2011, he joined the administrative department of Akerton Partners, S.L., additionally

supporting the different lines of business of the company (Back Office).

In 2017 he became part of the team of Annu Inversiones, S.L., participating in various transactions of assignment of receivables, loans and debt purchase.

Marta Muñoz

Marta holds a degree in Business Administration from the University of Castilla la Mancha.

In 2017 she began her professional career by offering tax and commercial advisory services to various companies.

A year later, in 2018, she joined the financial department of Rosa Clará Group, in which she developed financial analysis tasks and accounting oriented to the presentation of monthly results.

In 2019 she joined the Financing department of Akerton Partners.

In 2019 she joined the Financing department of Akerton Partners.

Francisco Camacho

Founder and CEO

Francisco has a degree in Economics and Business Sciences with specialization in Audit by the Complutense University of Madrid, Advanced Direction programme in INSEAD (Fontainebleu). He has accomplished financial courses in Spain, France and U.SA.. He has been teacher and speaker in several universities besides giving lectures. He is member of the REA, ICJ.

In 1984 he joined Arthur Andersen as industrial businesses manager, being responsible of several projects in both audit and consulting.

In 1993 he joined Alstom as CFO and council secretary, being financial responsible and Advisor of several companies of the Group in Canada, México, France and Spain, besides being responsible for Real Estate projects in Spain, as well as for global cash flow and of financing projects in different countries. I

In 2000 he joined to Auna as Administration and Finance Director, being responsible for various financing and debt restructurings, achieving in 2004 along with his team, the award to the best refinancing of the year (4.500M€), award given by the magazine Euromoney. In 2005 he was designated CFO of the Auna Group, culminating with the sale of the Group to France Telecom Group (the mobile phone business) and to ONO (the fixed-line business) for the amount of € 12.800M. From 2006 he was designated CFO Purchasing Director of Orange Spain by France Telecom Group.

In 2007 he was awarded by the Spanish Association of Financial and Corporate Treasurers (ASSET) with the award to the financial excellence in the category of “Best financial manager of the year”. The aim of this award is to distinguish the actions implemented by the CFO in the company and the original financial solutions that had contributed to the success of the financial departments and that had an impact on the companies performance.

In 2008 he founded the financial advisory firm today known as Akerton Partners.