Photo by Hillary Ehlen
The Bremer Bank Team
Julie Whitney, Senior Vice President
Judd Graham, Region President
Tim Nygaard, Owner
Jennifer Nygaard, Office Manager
Tim and Jennifer Nygaard pursued their dream. After working in the steel business for 13 years, they founded Integrity Steel. For 13 years, they plugged away doing small projects but have grown to do steel fabrication for schools, hospitals and really anything that has structural steel. Last year, they purchased Sheyenne Forming in West Fargo and have grown to 38 employees. All this was possible because of their banking relationship with Bremer. This led us to wonder how other manufacturing companies can leverage their banks to grow, so we got everybody in the same room to discuss it.
Tim: Judd and I had a previous relationship through another bank. We were having some problems going through financing. We were not getting a whole lot of help from them and going through a lot of red tape so I called Judd. After working on it for six months with the other bank, it took about three or four weeks to complete with Bremer. It was an easy decision after talking to Judd.
Judd: To be clear, it was an acquisition of a profitable business so we came out, you told us your whole story, told us how it fit into this well-run business and it all made perfect sense.
What you need to bring to a banker when starting to work with them
Julie: Anything that they need to know, we can help them with so approach us early. One of the interesting parts of the work that we did together was recommending a less cumbersome and complicated financing route than they were currently experiencing. We could partner with the Bank of North Dakota and do a PACE program loan, which is a five percent buydown on the rates so you get a very attractive rate. It’s geared towards economic activity.
Tim: They brought up that we should be using the programs that are provided by the state and by the city of West Fargo.
That was something that really wasn’t pushed by the other bank. I’m not a financial guy, so they explained it how I could understand it and made it easy.
Judd: I think a lot of businesses like Integrity Steel are businesses that the economic development groups really like. They’re called primary sector so there are a lot of programs and things to work with and we pride ourselves in being knowledgeable about those programs and being able to bring them to the attention of our customers when it’s appropriate. That’s exactly what we did here.
What to know when going through an M&A
Julie: We take a look at the historical financials from the seller and then we understand what the plan is, get information from our borrower on what their projections are going to look like, get some good details behind how those projections are going to play out and then take a look at what they’re looking to acquire and we make sure that we structure the debt so that they’ve got ample working capital because if you’re growing, you need cash to be able to invest in your inventory and your accounts receivable. We can give more of a mid-level term on equipment so we can go out five to seven years on equipment. We try to structure that so cashflow is manageable. Then we finance the real estate on longer terms, up to 25 years.
We really do look at the cash flows because we don’t want to help our customers finance their way into a trouble spot. So we do take a look at what cash flow can be generated from those acquisitions and those pieces of equipment to help ensure that our customer can successfully transition the acquisition. We’re in it for the long haul. We’re looking for relationships that are long-lived and mutually beneficial. So if we have a customer who comes in and says, “Hey, I want to pay X for an acquisition and I want to finance the whole thing” and the projections don’t work out, we’ll get into a conversation about how the structure should look, what might be comfortable and help them understand that they’re going to need cash to grow and make sure that they’ve got line availability for that.
Judd: In this case, because I had a history with Tim and Jennifer and knew the successful business they had at Integrity, it was easy for us to look at what he was projecting for the acquisition and for us to say, “Yes, he’s got experience and knows what he’s doing.”
HOW BREMER CAN HELP MANUFACTURERS
- Streamlined payables
- Capital financing
- Treasury management
- Adaptable business checking
- Secure business savings
- Attractive retirement plans