Thursday November 11th, 2021
Pablo Gómez in TTR´s blog
TTR: What are the most relevant drivers for consolidating the M&A market in Spain, over the medium and long term?
P.G.: The key drivers will be industry consolidation and the availability of liquidity.
Spain’s production network consists primarily of SMEs, and this makes it particularly difficult to compete in a fully globalized market. To face a sector’s strategic challenges, it is important to expand in terms of size because this provides access to better financing, talent recruitment, R&D investments and more. Without these levers for growth, it is extremely difficult for businesses to hold their competitive position in the medium and long term.
On the other hand, and as a result of the expansive monetary policies implemented in recent years, there is a great deal of liquidity on the market, leading to strong investor interest on behalf of industrial companies as well as financial investors seeking to lead this sector consolidation.
TTR: As one of the leading M&A financial advisors in the Spanish market, how has IMAP Albia Capital handled the crisis in terms of advising clients and what opportunities has the company identified in the past months through the current situation in the country?
P.G.: Throughout the crisis, we have sought to remain close to clients, guiding and advising them from a corporate finance perspective in the challenges that have arisen, striving to provide solutions; as well as in the opportunities that have emerged (the other side of the crisis).
We have identified a number of sectors impacted by the crisis in terms of the opportunities for growth for some and the resulting issues for others, and we have been working on them for months in order to add value to each one. In this sense, we have helped companies grow in segments for which the crisis has created opportunities, and spearheaded consolidation and restructuring solutions in other markets where survival is a matter of reorganization, resulting in companies that are more competitive and have a better market position.
TTR: In which sectors might international investors find the biggest opportunities in Spain in 2022? Why?
P.G.: In Spain, just like in other economies, certain sectors are extremely consolidated and others offer major opportunities for growth. We have identified sectors that have a large number of corporate deals (34% of transactions registered in IMAP between Q1 and Q3 of 2021) and are expected to continue leading investor appetite. These are technology, health and food.
Overall, these sectors have a major R&D&i investment component, new technological solutions, innovative business models and a high level of expected growth, with strong investor interest on behalf of industrial companies and of private equity funds.
On the other hand, Spain has been the focus of international investments in many industries for some time now, and we do not foresee this trend changing in the short term. In our case, over the past three years, approximately 60% of the deals successfully closed have involved international counterparts.
TTR: Regarding corporate restructuring, what are the prospects in Spain?
P.G.: Due to COVID-19, a series of measures were implemented in Spain with the aim of keeping companies intact, at least during the most challenging times of the crisis: temporary redundancy plans, ICO loans with terms adapted to the actual repayment capacity of most businesses, bankruptcy moratoriums and more.
The consequences of the crisis are expected to appear more forcefully over the course of 2022 in companies exposed to sectors facing difficulties and with an unbalanced structure. This, paired with the end of ICO loan grace periods, seems to indicate that next year there will be a significant rise in the number of restructuring projects compared with 2021.
TTR: What will IMAP Albia Capital main challenges be in terms of M&A deals in Spain during 2022?
P.G.: Our goal for 2022 is to remain as one of the top M&A advisors for Spain’s middle market, so we will continue to work proactively in certain sectors, identifying businesses for whom we can add value in the area of corporate deals. Although there is still a great deal of uncertainty, overall economic growth is expected for 2021 and 2022. We aim to play a major role in reorganizing the Spanish economy by making our knowledge available to clients so together we can build a larger and more competitive production network that has the potential of attracting and retaining talent, resources to invest, the ability to create value-added jobs, and a good outlook for competing globally.