Treasury lessons from growth companies
With limited resources at hand, treasurers at the French nursery operator, Babilou Family have to go beyond basic treasury tasks to drive expansion of the company.
Speaking at the 2022 EuroFinance Treasury Management International in September, Clemene Tarenne, shared her journey from handling banking relationships at a large industrial conglomerate, to now as the head of group treasury at one of the biggest early education networks in the world, Babilou Family.
Leading a team of four treasurers, Tarenne now manages equity and debt financing, working capital optimisation, maximise cash centralization alongside a plethora of functions to support the growth of the company across twelve countries
A broader curriculum
With an aim of expanding her scope of work, Terenne decided to move to Babilou Family in December 2019. “ I was mostly in charge of banking relations at General Electric [previous role] and I wanted to work on broader treasury functions including funding issues, so I made the change.” She told delegates at the conference.
However, the journey began with a big challenge as in a matter of two months, the company’s nurseries were being closed due to COVID-19 induced lockdowns around the world. While still grasping the mechanics of an early childhood business, she had to get up to speed with banks and financial institutions to ensure that the company was financially able to withstand the storm.
As a growing company fueled by debt, it was an arduous task to gain legitimacy from banks as they not only considered Babilou Family as a speculative asset but also felt that the company would have to depend on them to grow further.
“When you work for a smaller company, it’s very different to handle banking relationships, especially when you’re a growing company and are considered a speculative asset…it was a challenge to find the right banking partners to help us to grow with the right services.” Tarenne added.
Whilst handling the impact of COVID-19, the company also undertook a change in its capital structure as it raised fresh capital via equity financing alongside debt refinancing from a pool of banks, it also raised capital via the bond market. The treasury team not only facilitated these transactions but also engaged with dozens of bond investors to answer their questions and review legal contracts.
“My job has changed [by moving to a smaller company] because I’m not just a treasurer, I also have to be an accountant, review legal contracts, carry post-acquisition integration and also educate stakeholders” Tarenne further added.
Leading external growth
Simultaneously, Babilou Family has been growing significantly via acquisitions across multiple markets. For instance, in 2021 the company executed its largest takeover in its history for which the treasury team not only provided the funds to complete the transaction but also drove the post-acquisition integration due to an absence of a dedicated integration team within the business.
Tarenne told delegates that 20% of the time was setting up the right tools, training the team on how to use the TMS and e-banking system and other activities.
Furthermore, while revenue has almost quadrupled in the last few years, Tarenne noted that the culture towards generating cash didn’t react quickly enough. Therefore, a deep dive into the accounting data was required to pinpoint the specific discrepancies and to communicate the findings to the CFOs across the different regions in order to inculcate a cash culture within the finance department.
Another immediate challenge was in recruiting high-level talent. While people are often attracted to work for larger companies which are seen as having a greater impact on a CV, it was a difficult task to build a team to work for a relatively smaller organisation.
Building a treasury team from scratch meant that instead of hiring generalists, individuals with greater levels of experience and different skills were sought after, in addition to a project management background.
While in large companies, treasurers have the necessary means and resources to complete tasks in a vacuum, treasurers in smaller companies must still perform many of the same functions using both internal and external resources who often have competing priorities.
Babilou Family have shown that in a rapidly growing business, the treasury needs to find the right balance between executing different non-treasury tasks but also building an environment to support the development of a mature treasury department.