The idea that a classic loan can be smart money initially came from Gust Van Put, former bank manager of HBK Spaarbank, specialist in employee participation and one of Patricipiums’ advisors behind the scenes. Years ago, an old French book gave him the idea not to work with shareholders, but with financiers who provide a loan. “Do not look for shareholders but bond holders”, he advised Jan Lagast over a good glass of wine. That advice proved particularly valuable. The team of Participium would experience this for themselves later that day during their first informal meeting with their financiers.
Together with a credit provider or a bondholder you make agreements about an interest and a repayment period. With that, the entire financial picture is resolved and it’s finally possible to talk freely about the future with that financier. Of course, that financier will be concerned if you come up with crazy ideas or if the financial information of the company is unfavourable. Yet in all other cases, that financier knows that this conversation will not get him paid a euro more… and therefore he or she does not have to start monitoring (thinking: “then I’m sure that entrepreneur is not making me gain less”) or putting pressure to reduce costs (because “then I’m sure I will get more out of it”).
Participium experienced that this leads to a very different kind of conversation, at their first meeting of financiers. Of course they asked some critical questions, but the mood of the evening was one of support and of thinking along. Thinking along about opportunities, possibilities, growth. That feels very nice indeed. The same conversation with shareholders would have definitely been much sharper and more arduous. That is because in every conversation with the shareholder, the financial return is also included in the balance. This is not the case with classic loans. If you regularly inform those lenders, involve them and ask them for support, that’s when you get smart money. Moreover, due to this financial calm in the collaboration, that money is much “smarter” than it would be with shares.
Participium 