Thursday March 21st, 2019
“La venta de mi compañía es una decisión acertada” por Elías Martínez en El Economista 21032019
At certain times in the life of business people and of businesses themselves, one of the most far-reaching considerations is finding the right answer to the question: What should I do with my business when age or other circumstances require me to make a decision about the future? or How should I approach business continuity?
Those of us who provide consultancy services in corporate transactions are used to working with our clients in processes involving finance or strategic growth, etc., where there is a strategic and commercial rationality associated with the prospects for businesses that have an indeterminate temporal horizon.
However, when it comes to taking management decisions (growth, investment, etc.) in situations of uncertainty, we have found that business people are influenced by other aspects of a more vital or personal nature, which can have a notable effect on the future of the business.
It is not unusual for there to be a divergence between what the business needs and the personal stances taken by their owners or leaders, giving rise to different approaches such as:
- Choosing to stay in the ‘comfort zone’, managing the business in a ‘continuity’ mind-set without facing up to the strategic challenges, which could result in a weakening of the business’s position as against the competition, with the risk to its future that this entails.
- Being aware of the situation and putting in place mechanisms to ensure business continuity by way of looking for options through a corporate process, i.e. selling the company, in full or in part.
In the decision-making process for selling the business, there are moments of doubt and of concern arising from the feeling that one is being disloyal to oneself, or that one is giving up on the project of a lifetime.
However, and always within our experience, it is a decision that few have regretted when they see their project continuing with renewed strength, and when they are rewarded for many years of effort and sacrifice.
Taking advantage of this opportunity offered to us by El Economista, I will now describe a recent successful experience in the hope that it might help those who are currently facing the challenge of business continuity to take the right decision:
The Company was created in the early 1980s by two partners for the purpose of manufacturing automotive components.
The partners worked together at a company that went into crisis. They took advantage of the liquidation to buy up the assets, and in conjunction with part of the workforce they managed to convince some clients to continue making the parts.
In this case, the business vocation arose out of a need to find employment and the opportunity offered by a business in crisis.
Aged between 35 and 40 and with scarce resources, but with ‘bomb-proof’ determination, they set out on their new path.
For years the company has grown and has created employment and wealth. It has also gained a reputation on the market. It has been able to finance itself properly, distributed dividends and allowed the partners to live comfortable lives.
After a time, the partners faced a dilemma:
- The demands of clients to continue growing and take on new Projects in order to meet their requirements, all of which meant more investment, more staff, more dedication, etc., or to put it another way, leaving their ‘comfort zone’, with the threat that clients would change supplier if they did not respond.
- A reflection as to what their position as owners was, given that although the management was in professional hands, the successors had long since chosen not to continue with the business given that they had pursued their own professional careers, and none of the partners was willing to take on more shareholder commitments.
Faced with this situation and following a period of reflection, the partners decided that selling the business was the best option given that this would enable:
- The continuity of a business project founded nearly 40 years ago, with a renewed business vision while taking advantage of the opportunities in the market.
- Safeguarding the jobs of those employed by the company, with prospects for the future and for professional development, in a growth environment.
- The receipt of a monetary reward built up over time.
After the corresponding debates and with the approval of each family, IMAP Albia Capital was engaged as an expert consultant to find a buyer.
There followed a laborious process in which the following stages were addressed:
- Preparation of the necessary documents emphasizing the key strengths of the business;
- Selection and contact with suitable candidates (both national and international); and
- Negotiation of the economic conditions (price) and all other conditions of the transaction.
The transaction was successfully concluded and after ten months the company was sold to an industrial partner.
Following the conclusion of the process, the sellers felt overall satisfaction, because:
- Selling meant that the business came out stronger, with renewed vision, resources, and capacity, taking advantage of its industrial resources.
- The employees consolidated their future, at a company that will be able to offer new opportunities for personal and professional growth.
- The partners monetized their effort, and have the satisfaction of knowing that they founded a Company that is recognized for the good work it does.
‘Being aware of one’s own situation and taking the decision at the right time are key to being able to overcome the problem of business continuity.’