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Transfer of ownership

Are you thinking about buying or selling a company? Transfer of ownership raises questions for both buyer and seller. What’s the value of your company? What should you take into account when buying a company and where do you get the financing needed? We have compiled information about these issues in one place.

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We provide financing for the start, growth and internationalisation of enterprises and for protection against export risks.

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Start Guarantee for the start-up

Start Guarantee is intended for newly launched enterprises that are owned by private individuals and meet the SME definition applied by the EU. The bank will submit an online application for a Start Guarantee to Finnvera on behalf of the enterprise.

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Applying for growth financing

Finnvera's online service provides a secure and easy way for submitting financing applications. Log in to the service using your personal banking ID or your Katso ID.

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The owner is the determining factor

Different factors explain the success of small and large enterprises. According to studies, the company’s management is the most important factor for an SME. A large enterprise, in turn, has access to wider markets for management recruitment and, for instance, the option of transferring operations from one country to another to gain cost benefits. In consequence, for a large enterprise, the single factor having the highest correlation with the company’s success is simply its line of business.Since we at Finnvera have the opportunity to follow the stories of thousands of different enterprises and to observe the cause and effect relationships contributing to a company’s success – or sometimes, sad to say, its failure – I would claim that the owner is even more important for an SME than the management. Of course, these two are often the same person. But even when they aren’t, the owner has more direct influence over management selection and may intervene in the company’s day-to-day operations more than the owners of large corporations do.A good or a bad owner can be critical even for a large corporation – an example might be the revival of the Turku shipyard after its Korean owner was replaced by a German owner – but for an SME, the owner almost always has an absolutely pivotal role in the development and success of the Enterprise.Finnvera provides financing for over a thousand transfers of ownership each year. Statistics on the age structure of entrepreneurs reveal that the need for transfers of business to the next generation, and for business acquisitions, will continue at an exceptionally high level even for the next ten years. Surveys indicate that the principal bottlenecks are the matching of suitable buyers and sellers, accurate value determination and issues pertaining to taxation and law. Financing follows next.Together with enterprise organisations, Finnvera works actively to help eliminate all these bottlenecks. Throughout the country, we organise numerous events where buyers, sellers, experts in various fields and financiers can meet each other. Our goal is to ensure that as many enterprises as possible, after having been brought by their current owners along their own unique paths to this point in time, will find a good new owner who has the resources and the desire to continue in the future to the next success story!Pauli HeikkiläCEO

Press Releases
The Finnvera Group Half Year Report 1 January–30 June 2016

A marked rise in Finnvera’s authorisations – performance slightly negativeDuring the period under review, the maximum amounts of export credits and export credit guarantees that Finnvera is authorised to grant were raised through legislative amendments. The main reasons behind the need to raise the authorisations were the steep rise in ship financing within the past few years and the increase in the volume of export projects undertaken for telecommunications and the forest industry. The Group’s performance for the first six months of the year was EUR 7 million in the red, owing to losses and provisions for losses in export credit guarantees. The negative result for the first six months of the year does not affect the realisation of the cumulative self-sustainability of Finnvera’s export credit guarantee activities.The need for funding increased alongside the greater demand for export financing sevices. The fixed-rate bond of EUR one billion issued by Finnvera in April was the company’s first euro-denominated bond with a maturity of ten years.In April, Finnvera and enterprise organisations launched a joint campaign to speed up transfers of ownership in SMEs. Various activation measures are applied to increase enterprises’ awareness of issues such as valuation and taxation. During the first half of the year, transfers of ownership financed by Finnvera showed a rise of 17 per cent when measured in euros.In line with the Government Programme, Finnvera introduced a new debt-based mezzanine financing product onto the market: the Growth Loan. The new product is intended for financing SMEs and midcap companies in major growth and internationalisation projects.Business operations and the financial trendDuring the period under review, demand for Finnvera’s export and special guarantees and export credits rose steeply on the previous year: 50 per cent and 90 per cent, respectively. In contrast, demand for SME and midcap financing fell by 17 per cent on the previous year.Although the demand for export and special guarantees rose, the offers given by Finnvera for export credit and special guarantees and for export credits fell by 76 per cent and 87 per cent, respectively. The reason for this was that some of the projects or their credit agreements were still being negotiated at the end of June. The amount of loans and guarantees granted to SMEs and midcap companies fell by 11 per cent when compared against the first half of 2015. Finnvera Group 1 Jan-30 June 2016 1 Jan-30 June 2015 Change % Offered financing, MEUR           Loans and guarantees 483 541 -11 %     Export credit guarantees and special guarantees 1 226 5 124 -76 %     Export credits 477 3 601 -87 %           30 June 2016 30 June 2015 Change % Outstanding commitments, MEUR           Loans and guarantees 2 322 2 285 2 %     Export credit guarantees and special guarantees 16 896 17 436 -3 %     Export credits 4 718 4 240 11 %           1 Jan-30 June 2016 1 Jan-30 June 2015 Change % Net Interest income both fee and commission income and expenses, MEUR 93 102 -8 % Operating profit, MEUR -7 56 -113 % Profit for the period, MEUR -7 55 -113 %           30 June 2016 30 June 2015 Change % Balance sheet total, MEUR 9 166 8 418 9 % Equity; MEUR 1 116 1 121 0 %   - of which non-restricted reserves, MEUR 865 871 -1 %           30 June 2016 30 June 2015 Change % points Equity ratio, % 12,2 % 13,3 % -1,1 % Capital adequacy, Tier 2, % 18,9 % 19,6 % -0,7 % Cost-income ratio, % 30,6 % 28,3 % 2,3 % The Finnvera Group’s financial peformance for January–June showed a loss of EUR 7 million, as against a profit of EUR 55 million the year before. The result was EUR 62 million less than for the first six months of 2015.The principal factors affecting the negative result during the first half of the year were the increased losses and provisions for losses recognised by the parent company, Finnvera plc, for export credit guarantees. Losses on export credit guarantees and provisions for losses together amounted to EUR 66 million (2 million). During the period under review it emerged that the Brazilian Oi S.A. Group poses a risk that, if realised, might cause a loss that is currently estimated at about EUR 55 million. In consequence, the provisions for losses were increased during the period. Provisions for losses are current estimates. Their amount may still change considerably as more detailed information is obtained.The result of EUR -7 million recorded for the parent company, Finnvera plc, during the first half of the year (56 million), was broken down as follows: Large Corporates, EUR -17 million (48 million); SMEs, EUR 10 million (8 million).During the 17 years that the company has been in operation, the Group’s performance has been positive for all financial periods and, since the early 2009, for all six-month periods, until the recently ended period of January–June 2016. The parent company’s export credit guarantee activities have also been cumulatively self-sustainable throughout the company’s operations, even considering the negative result for January–June. Finnvera Group H1/2016 H1/2015 Change Change *2015   MEUR MEUR MEUR % MEUR Net Interest income 27 28 -2 -6 56 Fee and commission income and expenses (net) 67 73 -7 -9 141 Gains/losses from items carried at fair value -10 -6 4 63 -21 Administrative expenses -22 -22 0 1 -44 Other operating expenses -3 -3 0 -5 -6 Impairment losses, guarantee losses -65 -14 51 352 -15 Loans and domestic guarantees -15 -72 -57 -79 -87 Credit loss compensation from the State 15 60 -45 -74 83 Export credit guarantees and special guarantees -66 -2 64 - -10 Operating profit -7 56 -63 -113 114 Profit for the period -7 55 -62 -113 111 Outlook for financingIt is expected that demand for export credit guarantees and financing provided by Finnvera will continue to increase. Measured in euros, demand will probably continue to focus on cruise vessels, telecommunications and forestry. An internationally competitive export financing system plays an important role in these sectors, owing to the large scale of individual investments.New export markets have opened up, for instance, in Iran and Argentina. With opening markets, public financing sources, such as Finnvera’s export credit guarantees, are important for the realisation of export transactions. Among countries where Finnvera is exposed to risk, the situation in Brazil, Turkey and Russia is expected to remain uncertain. This will pose challenges to enterprises operating in these countries. On the other hand, Brazil’s and Russia’s weakened local currencies reinforce the operating conditions of export companies active in these countries. This may boost interest in investments and may provide export opportunities for Finnish businesses. The result of the British referendum on exiting the EU is likely to cause uncertainty in Europe for several years.During the first half of 2016, demand for Finnera’s SME financing was slower than a year ago. The financing granted was also at a lower level than the year before. During the first half of the year, Finnvera prepared the adoption of the Growth Loan, a new mezzanine financing product, and was getting ready to serve as an intermediary organisation for the European Fund for Strategic Investments. Together with the recently adopted programme on transfers of ownership, these developments are likely to increase the demand for and granting of financing in the latter half of the year.According to the estimate made in early 2016, the financial peformance for the current year is likely to fall below that  for 2015. The negative result for the first six months of the year does not affect the realisation of the cumulative self-sustainability of Finnvera’s export credit guarantee activities.CEO Pauli Heikkilä:“Finnvera’s exposure figures have risen higher than ever before, and it is expected that demand for export credit guarantees and financing provided by Finnvera will continue to increase. It is important to ensure the functioning of our export financing system so that Finnish companies can compete over export deals on equally good financing terms as their competitors.With respect to SME financing, the growth in the volume of enterprise acquisitions has been gratifying. We shall continue our efforts to encourage transfers of ownership; the greater the number of companies that continue their operations, the better it is for the overall economy of Finland. New owners often bring development ideas and the wish to grow.The Team Finland network is under intense development. Improvement of the joint domestic service model will continue for the rest of the year. So far the feedback from customers within the scope of the service has been positive. Team Finland cooperation will get a boost in practice with the impending move of Finnvera, Finpro, Tekes and Finnish Industry Investment to joint premises in Team Finland House, in the Ruoholahti district of Helsinki.Finnvera’s statutory mission is to bear some of the credit risks that are inevitable in all export transactions. Some of these risks were realised during the first six months of the current year.”Half Year Report 1 Jan - 30 June 2016 (PDF)Additional information:Pauli Heikkilä, Chief Executive Officer, tel. +358 29 460 2400 Ulla Hagman, Senior Vice President, CFO, tel. +358 29 460 2458

The new financing model proves to be an immediate hit

During its first year, Finnvera’s Start Guarantee attracted applications for 1,600 financing projects. An entrepreneur considers the guarantee convenient for start-ups.Both banks and entrepreneurs have found Finnvera’s Start Guarantee, which has been in use for a little over a year.According to Team Leader Leena Waarna, banks have submitted applications for Start Guarantees to Finnvera for 1,600 financing projects.The bank applies for the Start Guarantee on behalf of the entrepreneur. In other words, the entrepreneur only deals directly with his own bank. Finnvera’s guarantee coverage can be at most 80 %. However, the total sum of Start Guarantees granted to one enterprise may not exceed EUR 80,000.“The Start Guarantee is also well suited for smaller projects, for instance from 30,000 to 50,000 euros in size. Therefore, entrepreneurs should not be discouraged even if they don’t have proper collateral for the bank,” Waarna says.She encourages starting entrepreneurs to contact local advisory services first. They have information, for instance, on competition in both the region and the sector involved.Companies’ initial costs and financing needs vary widely.A few tens of thousand euros is enough for the initial working capital for example in the service sector, whereas considerably more money is needed for investments in projects involving production.“Entrepreneurs are generally pretty good at calculating their expenses in advance. In contrast, turnover forecasts are easily over-optimistic. It is expected that turnover will start to accumulate quickly, and payment schedules are drawn up accordingly,” Waarna says.“Realistic overall calculations and correctly dimensioned credit with its repayment periods help the fledgling entrepreneur to avoid the worst pitfalls,” she continues.A faster startTuure Parkkinen, an entrepreneur from Helsinki, praises the Start Guarantee lavishly.“The Start Guarantee was unusually easy because the bank filed the application for us. From the entrepreneur’s perspective, there was little red tape. In the end, we decided to withdraw 25,000 euros,” Parkkinen reminisces.Together with his partners, he founded ResQ Club late last November. Using the digital service developed by the enterprise, consumers receive information on food that is about to go to waste in restaurants, bakeries, cafés and hotels.The service gives consumers the opportunity to buy food at discounts exceeding even 50 per cent. Restaurants, in turn, can reduce their waste.Parkkinen says that the founders had little savings when establishing their enterprise.“Even if we ourselves worked without pay, some expenses are inevitable at the start. Now we were able to kick off more quickly.”From the very start, ResQ Club’s services have attracted interest among both investors and consumers.With private individuals and venture capitalists as new investors, the company issued a financing call of over 300,000 euros. At the same time, ResQ Club announced that the service is also being launched in Sweden.The service has about 20,000 registered users and 150 partner suppliers.FACT: What’s a Start Guarantee? The Start Guarantee is intended for start-ups and enterprises that are no more than three years old. The enterprise must be owned by private individuals. The Start Guarantee is particularly well suited for small-scale financing, especially if the entrepreneur has insufficient collateral for the bank. Finnvera’s guarantee coverage is at most 80 per cent. The total amount of Start Guarantees granted to an enterprise cannot exceed 80,000 euros, in which case the maximum loan sought from a bank under the Start Guarantee is 100,000 euros. For collateral, the principal shareholders lodge special guarantee undertakings that must cover at least 25% of Finnvera’s guarantee sum. The enterprise presents the financing application to its own bank. Thereafter, the bank assesses the credibility of the business and checks the calculations and the applicants’ creditworthiness before granting financing. The bank submits the application for the Start Guarantee to Finnvera on behalf of the enterprise. The Start Guarantee is intended especially for the working capital and investment needs of start-up enterprises. It cannot be used for financing company acquisitions or purchases of business premises. The Start Guarantee may also be one part of the enterprise’s aggregate of loans. The maximum repayment period for loans under the Start Guarantee is ten years. More information about the Start Guarantee is available here.More financing solutions for setting up a company are found here.Text: Kimmo Koivikko

Press Releases
Argentina opening up after 15 years – new export opportunities for Finnish companies

In South America, the Argentinian economy is gradually opening up for foreign business again. Finnvera’s experts see opportunities for Finnish companies in Argentina.Argentina’s economy collapsed at the turn of the millennium and, owing to unpaid debts, the country remained outside international financial markets for many years. However, the new conservative administration has taken quick action to resolve any unsettled disputes with Argentina’s creditors. In consequence, the country is gradually able to renew its relations with international providers of financing. The new Government has also lifted the restrictions on foreign trade.According to Jussi Haarasilta, Executive Vice President at Finnvera, Argentina is gradually becoming a potential export country for Finnish companies.“Necessary reforms were neglected during Argentina’s long period of isolation. For instance, the infrastructure is in urgent need of development, and that’s where Finns might well have a lot to offer in the coming years. This could mean, for example, telecommunication and electricity networks, mining, wood processing and the construction of harbours,” Haarasilta lists.“In short, the traditional Finnish export portfolio is well suited to Argentina’s future needs.”Haarasilta stresses that with its population of 43 million, Argentina is now becoming an attractive market for many companies.“Competition will be stiff for certain,” he predicts.“Realisation of large projects calls for financing, which in turn requires that the counterparty is creditworthy. Argentina was outside export credit guarantees for years. At present, Finnvera can support the financing of trade and is investigating how to guarantee long-term credits,” Haarasilta says.“It pays to look into partners’ backgrounds”Many companies have already contacted Finnvera to inquire about the situation in Argentina. Senior Adviser Mika Relander visited Argentina recently and underlines that even if Argentina offers promising opportunities, companies considering business there should still exercise caution.“The operating environment continues to involve risks, especially in the public sector, as the country’s economy is still rather weak and will require many long-term reforms. Good examples are the large subsidies for electricity and petrol prices that need to be dismantled before the public economy can be balanced.”“Otherwise, too, it pays to investigate customers’ solvency and the partners’ backgrounds in advance together with Finnvera,” Relander says.However, according to Relander, Finnvera always strives to seek and tailor financing solutions that would make the export transaction possible.“Still, in the case of Argentina, we also need to be rather cautious,” he adds.Additional information:Jussi Haarasilta, tel. +358 29 460 2601, jussi.haarasilta (at) finnvera.fiMika Relander, tel. +358 29 460 2725, mika.relander (at)

A growth entrepreneur’s tip for a good team: Don’t hire your course mate

Recruiting the right people and the owners’ capacity to take risks are crucial for a company’s growth.Everyone makes mistakes, but you should learn from them, growth entrepreneur Lennu Keinänen urges.Keinänen says that he himself has stepped on all possible mines, from market analyses to financing. Despite that, he has taken part in founding nine enterprises. Of these, the best known is Paytrail, a provider of online payment services. The Danish company Nets acquired 80 per cent of the enterprise two years ago.However, Keinänen identifies the team and its importance as the biggest mine.“Team members must have  sufficiently diverse backgrounds. It’s not necessarily a good idea to hire your course mate,” Keinänen points out.In his view, building the right team can start once the entrepreneur understands what he or she is actually doing.“Corporate culture must be created first. In the end, culture is shaped only through people, but its desired state must be known so that the entrepreneur can make the right recruitment choices.”Despite his young age, Keinänen has already been an entrepreneur for 20 years. He set up his first enterprise, in Kuopio, at the age of 15. Growth, internationalisation and financing are all interlinked. Growth has always been at the core of Keinänen’s enterprises as well.“Growth calls for bigger thinking, that is, leaving one’s own sandbox. One of the worst things is underfunding. Growth is always more expensive than you had originally thought,” says Keinänen.He agrees with Kim Väisänen, a successful entrepreneur who says that a company has only one crisis and that is the cash crisis.From bikinis to a growth trackStudies indicate that young people are eager to start their own enterprises. Young entrepreneurs have recently gained visibility otherwise, too, with the selection of the Young Entrepreneur of the Year in Jyväskylä last Friday.Last year this recognition went to Varusteleka, which has also sought growth outside Finland.One of the finalists this year was Biancaneve of Tampere, a maker of individual sports garments. Biancaneva was ranked third in the national competition. Entrepreneur Elina Loueranta acknowledges that she has also stepped on various mines.“My dream was only to make clothes. At first I didn’t even calculate any profit margins,” Loueranta says.The awakening came three years ago at a growth camp where other companies were making plans for internationalisation. “We were so small next to the others. One company was selling a million screws to Russia and we were talking about bikinis. We were asked if we really believed that we could grow and become international. It didn’t occur to me to answer that each bikini cost 600 euros,” Loueranta recalls.Not even all of the team members believed in growth. The entrepreneur says that one team member aroused doubt in the others, too.Intervening in the situation required a lot, but it was necessary.“I stood up from behind the sewing machine and started to look at the big picture,” Loueranta says.With its turnover of about half a million euros, Biancaneve is living a strong growth phase. This summer, the company is launching a webcam service that will allow customers to order Biancaneve’s tailored bikinis from anywhere in the world.At present, growth is brought by a luxury-focused sportswear collection designed for women. The marketing of this product line also takes the entrepreneur outside Finland.“We wanted to go abroad and we were asked whether we were ready to travel. Now this has come to pass. Relations can only be created face to face,” Loueranta concludes.FACT: Ways to break the glass ceiling on growthAccording to research, one out of five enterprises has hit the glass ceiling on growth.The main factors keeping a glass ceiling on growth are sales and marketing skills, the availability of competent staff, the acquisition of financing and the capacity of owners to take risks.Growth entrepreneurs believe that the glass ceiling can be broken if the management or the owners have sufficient capacity to take risks. That is the most important single way. Other important ways are product and service innovations, sales and marketing expertise, the availability of competent personnel and customer demand.Obtaining adequate financial resources is another tool for breaking the glass ceiling.This information is based on the Growth Enterprise Survey, conducted by the Kauppalehti business periodical and sent to 715 entrepreneurs, of whom 92 responded.There are several financing solutions for working capital needs and for starting business abroad.Text: Kimmo Koivikko

Press Releases
Finnvera to speed up the financing of small export transactions

For its own part, Finnvera wants to ease the financing of smaller export transactions carried out by enterprises. The first step is the new Bill of Exchange Guarantee, which is best suited to transactions of less than two million euros.Finnish exports are concentrated in a few sectors and are dominated by large corporations. SMEs account for only about 15 per cent of the total value of exports.“It is evident that Finland needs more SME exporters. In general, simpler financing options should be available for small export deals. Complex credit documents and their high costs are often obstacles to financing the smallest transactions. The first product we are launching is the Bill of Exchange Guarantee, where we have considerably relaxed our requirements for both the exporter and the bank. We’ll continue making our services increasingly responsive in order to help Finnish exporters in their sales efforts,” says Executive Vice President Jussi Haarasilta.A bill of exchange is a traditional means of paymentThe use of bills of exchange has gradually increased in foreign trade in recent years. The bill of exchange serves both the exporter and the buyer because the exporter is paid in cash while the buyer is given payment time. Finnvera’s Bill of Exchange Guarantee, in turn, protects the bank from any credit losses that might arise. Compared to a loan agreement, for example, a bill of exchange is a quick and cheap payment instrument.“Our new Bill of Exchange Guarantee requires no security for small transactions of under two million euros. We trimmed the contents of the guarantee agreement and simplified pricing. We also cover risks stemming from the application of laws and regulations on bills of exchange that have been passed in various countries. We want to boost transactions of this size class in particular by increasing flexibility in our guarantee terms associated with export bills of exchange,” Team Leader Eeva-Maija Pietikäinen explains.The exporter applies for the guarantee from Finnvera and submits credit data and financial statements on both the buyer and the guarantor, if any, over the past two to three years. Additional information is requested, if necessary. Finnvera always makes guarantee decisions individually for each project.Finding the right kind of payment method requires cooperation with the exporter, the exporter’s bank and Finnvera. It is essential that the financing is planned well in advance before the conclusion of the export transaction. In this way it is possible to select the payment method that suits each export deal. This is important particularly for bills of exchange because not all countries use them as a means of payment.Additional information:Jussi Haarasilta, Executive Vice President, tel. +358 29 460 2601Eeva-Maija Pietikäinen, Team Leader, tel. +358 29 460 2674Products > Export Credit Guarantees > Bill of Exchange Guarantee

Change is good

Marju Silander, Managing Director of the Women Entrepreneurs of Finland, sees many solutions for improving the state of the economy. One key factor is to seek growth through internationalisation and transfers of ownership.Finnish working life and enterprise structure have been in turmoil in recent years. Marju Silander, herself an entrepreneur by background, has been on the front line of this restructuring. Prior to her appointment as Managing Director of the Women Entrepreneurs of Finland, Silander had earned her stripes, among others, at the Regional Organisation of Enterprises in Helsinki.“We have changed from a Finland of large corporations to a Finland of micro-enterprises.”According to Silander, Finnish legislation is still living in the time of large corporations even though the current Government strives to revise the structures of working life and to dismantle unnecessary regulation.“Most jobs are created in small and micro-enterprises. By following the Think Small First principle of the EU, Finland Ltd could be brought to the present day,” Silander ponders.Small enterprises face a new situationSilander is concerned about the lack of international growth. Economic growth centring on Europe does not seem to trickle to Finland.“Small enterprises face the challenge of how to reach the international growth market. A strong domestic market is not enough to stop the spiral of increasing government debt: in practice we are sitting at the same table circulating money from one purse to another,” Silander summarises the situation.She believes that technology-driven industries, in particular, have growth potential. Sustainable development and the circular economy, ageing of the population and the health and wellness boom offer diverse opportunities for creating new products and services for the international market. Younger entrepreneur generations also have the enthusiasm to venture out into the world.“It’s no longer necessary to think that first we’ll establish a company and then we’ll go international. Instead, there can be a bigger picture from the very start,” Silander says.Being an entrepreneur has become attractive: young entrepreneurs are increasingly eager to seize the opportunity to build exactly the kind of life they have dreamed for themselves.“In addition to the cultural shift, the many years of entrepreneur training given by educational institutions and entrepreneur organisations are finally starting to bear fruit,” Silander rejoices.Transfers of ownership add momentum to Finnish work life Internationalisation is not an option for all entrepreneurs. Certain local services cannot be globalised or digitised, and boosts for business must be sought through other means. Silander says that transfers of ownership are a pivotal tool for growth in the Finnish economy.“At present we have more than 80,000 entrepreneurs over 55 years of age. Nearly one third of them have announced that they will wind up their business when they retire. It is also known that, in general, one transfer of ownership affects on average four people. This means that many jobs are in the danger zone,” Silander ponders.Lack of information is one reason why there are so few transfers of ownership.“Especially sole entrepreneurs are often too modest when putting a value on their enterprise. As a trade association within the Federation of Finnish Enterprises, we also conduct serious dialogue with Finnvera about how we could make entrepreneurs understand the realisable value of their enterprises so that they can continue to offer jobs in the future as well,” Silander explains.She mentions a case where a woman entrepreneur was about to wind up her enterprise for good, but decided in the end to ask for advice about selling the enterprise. The outcome was that the entrepreneur was able to supplement her pension income with a profit of nearly 10,000 euros by splitting up the company’s inventories and operations into packages ready to buy.“In a way, we squander our assets if no deals are made. Entrepreneurs should feel proud and pleased for having created something that is useful for others, too,” says Silander.Finding the right partner is rewardingFor a starting entrepreneur, buying an existing enterprise is an excellent way to pick up speed quickly. The entrepreneur does not need to start from scratch, since networks, premises and processes are already available. In fact, persons who have become entrepreneurs by buying an enterprise are on average more satisfied with being an entrepreneur and feel that they have made a go of it.According to Silander, buyers’ knowledge of company acquisitions is also scanty.“Many people come to Enterprise Agencies with their own ideas. If the idea isn’t viable, it could be proposed that a development partner be sought in an existing enterprise,” Silander suggests.When a novel idea is combined with an operating enterprise, the result may be something brand new. Earning money on the basis of one’s own idea will then take less time and, on the other hand, the idea may also be refined in the process.What’s more, transfers of ownership are an excellent way to expand existing business operations.“When two enterprises are put together, the result may sometimes be greater than two. It would be really valuable to get people together at an earlier stage instead of waiting until the enterprise has suffered from years of underdevelopment,” Silander sums up.Silander compares selling an enterprise to selling a home: usually everyone selling their home makes sure that they get as good a price as possible when closing the sale. She urges entrepreneurs to keep this philosophy in mind at every stage of developing their companies. Quotes “Finland is such a small country that cooperation is extremely important. We cannot waste time by arguing among ourselves; instead, we must stand as a united Finland against China, Germany or Sweden.” “If the only plumber in the village closes up shop, it should be in the interest of towns and municipalities to look for a new entrepreneur in the locality rather than letting operations cease and allowing residents’ basic services to decline.” “Business Infrastructure Analysis, which is a public service provided free of charge, is an excellent way of keeping abreast of a company’s development potential and value. It would be good if every company were given a kind of ‘annual inspection’ at certain stages of the life cycle.”Text: Noora Puro Photo: Heidi Strengell

A tip for growth companies: abroad the use of money doubles

It often comes as a surprise when sales lag behind expectations. An entrepreneur’s advice is to seek local partners.Growth companies entering international markets badly underestimate their need for financing.There are many reasons for this.The most common reason is that the business launches organised by enterprises abroad are in fact much more expensive and more time-consuming than had originally been planned.The discrepancy between plans and reality is explained, among others, by unexpected turns of event and more sluggish sales of products or services on targeted markets.“The costs are always at least twice as much, and the need for external financing three times greater than what had been planned. When drawing up their budgets, companies are slightly overoptimistic. The fact is that an enterprise must get loads of visibility on the consumer market. Achieving credibility in business between companies takes time,” says Titta Mantila, Vice President, SME Financing at Finnvera.She heads the Growth and Internationalisation Team at Finnvera.According to Mantila, Finnish companies are told repeatedly about the importance of sales skills. However, skills in financing and economics should not be underestimated.Shareholders’ equity should account for almost one third of the total need for financing. Additionally, it would be good to think about what happens to the company if everything goes wrong abroad. In other words, risk tolerance.“Nor does it hurt to learn about the target countries and their business culture,” Mantila continues.There are no major differences in the financing needs of growth companies and companies with a slower growth pace. Working capital is the most common reason for seeking external sources of financing.With growth companies, everything is just a lot bigger. The financing granted to a growth company by Finnvera is on average about EUR 400,000.“No one can set up an international business with 100,000. Companies turn to us to obtain financing for expanding their own organisation, recruitment, sales and marketing, and for launching on international markets,” Mantila lists.She says that, for instance, Finnvera can offer several financing solutions for working capital needs and starting business abroad.Seek partnersKatja Lindy-Wilkinson, Marketing Director of Picote Oy Ltd and CEO of Picote Solutions Inc., admits that a perpetual shortage of resources has also slowed down the growth of the company based in Porvoo, Finland.The company renovates drainage pipes and develops and manufactures pipe lining tools, and has been able to forge ahead abroad in step with financial resources.“Equipment sales abroad began in 2012. Our German partner wanted to become a reseller, and that gave us a good start,” Lindy-Wilkinson reminisces.Today, foreign buyers account for 88 per cent of Picote’s equipment sales. The company, with a turnover exceeding six million euros, has 19 resellers around the world.Lindy-Wilkinson, who has lived in the United States for years, says that resellers are supported in many ways in their efforts to succeed. In return, resellers bring added value with their knowledge of the local markets.“The chances of success are much better if you find local partners. It’s also worth remembering that there are many Finnish expatriates living all over the world. We, too, hired a Finnish consultant in the USA. That person was an excellent support for us,” Lindy-Wilkinson says.FACT: Does the lack of money slow down growth? According to companies, the main factors keeping a glass ceiling on growth are sales and marketing skills, the availability of competent staff, the acquisition of financing and the capacity of owners to take risks. During the first months of the current year, Finnvera’s financing for enterprises exceeded 300 million euros. Growth companies accounted for 49 per cent of this. Despite their potential, not all companies seeking solid growth have a long, economically profitable history behind them. In consequence, their rating may not be high enough. Rating affects the price and availability of money. The rule of thumb is that loan financing must be accompanied by a sufficient amount of equity. It can be considered that 30 per cent is a sufficient amount. Text: Kimmo Koivikko

The Growth Loan for faster growth and internationalisation

At the beginning of April, Finnvera’s selection of financing services was supplemented with a new loan product, the Growth Loan.Kalle Åström, Program Manager at Finnvera’s SME Unit, for what types of projects is the Growth Loan designed?– The Growth Loan is intended for financing SMEs and midcap companies in major growth and internationalisation projects or corporate reorganisation. The idea is that the loan would attract financiers operating on market terms to invest in projects where risks are high but profitability and effectiveness are deemed to be good.Who can apply for a Growth Loan?– Finnvera’s Growth Loan may be granted to SMEs and midcap companies that have been in operation for over three years. The loan is not suited for the very start of business or for small projects. In these situations, some other financing product we provide may be the solution; for instance, Finnvera’s Start Guarantee, where the bank submits the guarantee application to Finnvera on behalf of its customer.The Growth Loan is a debt-based mezzanine financing product that combines the features of both equity and debt financing. The company’s self-financing portion must always be at least 20% and the share contributed to the total financing by financiers other than Finnvera must be at least 50%.The Growth Loan is granted for each project on a case-by-case basis. Project profitability and eligibility for financing are assessed together with other financiers.Read more: Growth Loan


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