One day I was asked about selling or not selling the company.
It seems like a simple question, but there are many scenarios and situations to be considered to answer this question.
From my point of view as a Broker in M&A, I prefer to manage with businesses that are operating, generating cash, with sufficient working capital and positive prospects, so it is much easier and even faster to close the sale.
But we could think: what makes the entrepreneur, or a Business Group, sell an asset with so many positive attributes?
In the current troubled moment in world’s economy, there are many reasons that would lead to this decision. For example, a strategic decision present in the Business Plan to realize profits, or the entrepreneur and the Board understand that from now on, this operation must gain new investors and new players to remain as a champion… There are several reasons. And there are also emotional aspects, from the point of view of the businessman who dedicated a large part of his life building the company and now wants to rest.
On the other hand, if business is not going well, there is capital restriction, falling sales or compromised profit, certainly going into the decision of selling the company can be even a bigger problem, which will reduce the value of the business and generate even greater losses. In this case, revitalization processes with specialized consultants are always recommended, there is a universe of competent people in the market to accomplish this. I know at least three of them who certainly act with positive responses.
The Brazilian market, in recent years, has shown high volatility, there are moments in time when “the glass is full” and others, when “the glass is empty”. To move between these scenarios certainly requires a lot of talent and, in most cases, quite a lot of stress. Even if the situation is favorable, deciding the next step is always a profound dilemma, and in this sense the entrepreneur lives his “entrepreneurial loneliness”. There is no one to consult, it turns to be an exclusively personal decision, the best consultant is conscience itself, and at this point economic variables will always have an important weight, in addition to sentimental and emotional aspects.
I highly recommend including into the Business Plan the issue of a possible sale of the company, discussing the matter with the main shareholders, considering indicators such as profit on equity, ROI, cash balance, and taking into account that a well-constructed sale, in addition to taking some time, requires planning and specialized advisory, which will act with secrecy, discretion and with a high degree of assertiveness.
If you have something to add to this article, please share it so that M&A operations become more and more professional.
IVAN RODRIGUES – BROKER M&A