Do not miss the boat
After the financial crisis of 2008/2010 we had already got used to dealing with a certain degree of fluency in environments of uncertainty and now we are once again facing a scenario where, at a global level, we do not know neither the scope nor the duration of the so-called “New Normal” derived from the COVID 19 . In these scenarios, making strategic decisions is hard, but it is clear that this is also a time of important opportunities for change and regeneration that will allow us to emerge from the crisis wiser, stronger and with renewed visions.
Regarding Corporate Operations, we are going to see movements between companies, buying and selling, mergers, integrations and alliances, which will aim to make companies more competitive, more integrated, and ultimately stronger and better able to meet new challenges.
The crisis situation will induce owners of family businesses or not, without a clear succession or lack of it, which may be tired to lead in conditions that will demand management efforts in these times, are at the dilemma of what to do, put the company for sale or wait for the situation to improve.
It is frequent and human that when facing the decision about business continuity, doubts arise about when the time is right:
“These years are not being good and I will wait for the situation to improve” …
“Now is not the time because I am going to start important projects that will increase the value of the company” …
“Now that the company is doing well I will wait a little longer” …
In short, reasons whose objective is to delay a decision that is inexorable and that according to our experience in accompanying this type of reflection, time in a high percentage of cases goes against the process and the interests of the property.
We are in moments of uncertainty, but also of opportunity to make companies, more dynamic, with greater size and more added value. As a country we have a strong industrial capacity in mature sectors, with good companies but with low profitability that are in need of restructuring, modernization and ultimately a process of concentration.
On the other hand, there are companies and/or business groups with management resources and financial capacity to deal with operations and make concentration processes more dynamic. Likewise, there are many foreign companies that consider our companies to be of interest and therefore ,target of their investments.
Financial investors have liquidity and are in permanent search of projects in which to invest which can be an important help to face the challenges of this new crisis, or to replace the current owners.
Based on our experience, the current situation is a time for shareholders with concerns about the continuity of their companies to make their reflection on how to approach and especially when it is time to address this great and definitive personal and business challenge. Every corporate operation is complex both because of the technical difficulty itself and because of the emotional burden that the decision and the negotiations carry until agreements are reached, and obviously because of the economic/economic sense. Therefore it is very important to have the convictions established before launching the process.
For those entrepreneurs/shareholders who are facing this dilemma, our advice is not to let the moment pass by. There are coming hard and demanding years but also of opportunities that, if not taken advantage of, will most likely not arise again and the train of change will be missed.
We know very few owners who have regretted having sold their companies, or incorporated new partners into their projects, but we do know many who have regretted having missed the opportunity.
*Photo: Mingo Fishtrap album cover, “On Time”.