Managing LBO Debt Repayment: Sterimed
Florence Sicault, Chief Operating and Financial Officer of the Sterimed Group, explains how she manages the group’s cash position with Agicap.
Read moreWatch the videoKey takeaways
Agicap is the cash management software Sterimed uses to handle the repayment of its LBO debt (following its buy-and-build strategy) and to track its consolidated, multi-site, and multi-currency cash position.
Sterimed has annual revenues over $270M and is targeting $540M within 5 years through the acquisition of 10 new companies.
By automating the consolidation of bank accounts and cash flow forecasts in Agicap, Sterimed has achieved significant time and accuracy gains, with widespread adoption of the tool thanks to multilingual training.
" Thanks to Agicap, we were able to be more precise and more efficient in managing our cash flow, as well as abandon our multiple Excel files altogether. "
20
companies make up the group now
60+
bank accounts connected to Agicap in 5 currencies
+270M$
in consolidated sales
Customer’s history
Sterimed is a global world leader in the production of medical packaging. One in four medical devices worldwide is packaged by this French group.
Sterimed’s story started in 2016 with the carve-out of the Healthcare division of paper giant Arjowiggins. This deal, backed by Meeschaert Private Equity, led to Sterimed’s first LBO.
Since then, the group has experienced remarkable growth, quadrupling in size over 7 years. Sterimed now operates in 120 countries, with over 1,300 employees, more than 20 companies, and 12 factories worldwide.
Sterimed has made a number of acquisitions, including EEE (Mexico) and Green Sail (China).
This growth was fueled by a second LBO, with Sagard becoming the main owner in 2019 and the debt refinanced by Société Générale and Capza.
" The advantage of having Agicap for us was also that we had a fairly precise and clear view of the cash flow which we could regularly check to repay the LBO debt. "
Customer’s needs
Ensure repayment of LBO debt by transferring available cash from subsidiaries, in the absence of automatic cash pooling.
Have a solution that can support ongoing expansion through M&A activity and multi-currency cash management.
Improve the accuracy of cash flow forecasts for subsidiaries and the group by abandoning the use of Excel.
Maintain subsidiary-level autonomy in cash management to maintain an entrepreneurial spirit within the group and give subsidiaries a sense of responsibility
Solution
The first phase of Agicap deployment involved integrating Sterimed’s 60 or so bank accounts. The accounts were first consolidated at the subsidiary level to allow real-time monitoring of cash balances and transactions. This data was then consolidated at the group level, on a dashboard that lets Florence Sicault oversee Sterimed’s global cash position.
This provided the finance team with a real-time view of each subsidiary’s cash balance, allowing them to fine-tune cash flows to the holding company for LBO debt repayment purposes.
The second phase of Agicap rollout involved integrating cash flow forecasts from the subsidiaries, previously managed in Excel. This information is now consolidated at the group level to create a complete cash flow forecast for the group as a whole.
" Deployment was made easy through multilingual training, meaning that we had training in Spanish, English or German, which ensured maximum buy-in at all sites. "
As a result, Sterimed’s treasurer no longer has to consolidate around twenty Excel-based cash flow forecasts every week. Sterimed has also significantly improved the accuracy of its forecasts. Previously, the process was tedious, and each time, the previous forecast history would be overwritten.
Every week, we would overwrite the previous week's cash flow forecasts, which meant that reliability was fairly low, and we also had no way of measuring our progress in terms of forecasting. Now, with Agicap, we can see whether our forecast was better or worse", explains Florence Sicault.
Automating the analysis of variances between forecasts and actual results has enabled Sterimed to further enhance its cash flow forecasting.
Today, Agicap is used by 3 people at the group level (the treasurer, Florence Sicault, and the group CFO), as well as by local finance teams at each subsidiary. The group finance department logs in to Agicap daily to review transactions and compare them against three-month forecasts.
Conclusion
Agicap is the ideal cash management solution for international groups operating under an LBO structure with a buy-and-build strategy.
Agicap can be used at both the group and subsidiary levels to manage cash, especially in the absence of automatic cash pooling.
Training users in their native language (or in English), along with automating time-consuming tasks, ensures optimal adoption of the Agicap solution.
