The current competitive dynamics increasingly affects the ownership models and business life cycles. Therefore, we must also consider the total or partial sale of the company as an option to be included in the company’s strategic repertoire.
“In an increasingly changing and globalized market, companies have shorter life cycles, that is, the sustainability of business time becomes more difficult.”
When socio-economic changes are constant, when technological innovation reduces the life cycles of the products, when the needs and tastes of the consumers modify the demand segments, the speed of internal change of the company must be similar to that of the environment to remain competitive and this is not always easy to achieve in many organizations…
“Ownership models must also evolve and open up to different alternatives and models to remain competitive.”
These processes, very consolidated in business models or startups whose vocation is to grow quickly to promote capital inflows or corporate operations, are not so much in those companies that come from very traditional or family-based property formats.
However, there are some movements that show that if you are evolving through processes of diversification and search for new business to “Family Investment Companies” where the ownership of company in which members of the family and for growth and diversification make investments In other business activities that are not always 100% familiar (other partners), they are more likely to sell their shares, associate with third parties, etc., in appropriate economic conditions, they do so without worrying about the lack of continuity of the Nexus that united your company and the family.
In addition, it should be borne in mind that more and more companies in growth strategy consider inorganic growth (through purchases and mergers) so that the activity of taking holdings increases and it is already common to have funds and investment companies, participations industrial companies, … in the most traditional business models, even family.
Mergers and acquisitions
Mergers and acquisitions market in Spain has grown more than 84% compared to the same period of the previous year in terms of investment volume and the entry of foreign investment has increased almost 400% over the previous year.
Given this situation, it is common for many entrepreneurs to ask themselves if it is a good time to sell their company.
The quantitative data of the market are favorable. Fundraising and investment increases every year in value and number of operations.
But to answer this question you must know at what stage of the life cycle is your company, in the phase of start or start, growth or expansion, maturity or decline.
What are the characteristics of the business model: degree of market and customer diversification, cost structure and solid financing, sustainable competitive advantages of the company in the market, scalability of the business, growing sector and the need to restructure by increasing the size of the the projects, qualified and experienced management team and technology orientation.
In all cases, a thorough analysis must be made of what is the ideal time for the sale, considering the situation of the company, the future of the industry, the objectives of the seller and design the process accordingly.
The sales process is always a very complex process and the difference between doing it right or improvised will be reflected in the company’s valuation, so it is always advisable to rely on professionals that help increase the value and reduce the terms and conditions of the sale .
The company must be valued by a professional with experience and independence, must leave aside the passion and emotional aspects when performing the valuation of companies and accompany in two phases: preparing the company for sale and second search of the buyer that provides the best conditions and optimizes its value based on what you are looking for with that strategy.
Not always these processes suppose an exit or abandonment of the business.
Many times they are the solution to generational changes, professionalization of management, linkage to international industrial groups, investment for growth and expansion, search for economies of scale and synergies …
It is an alternative that must be assessed and that we must include in the strategic repertoire of the company before major market changes or simply understanding it as another model of financial cooperation and corporate alliance.
Also, keep in mind that more and more companies in their growth strategy consider purchases or mergers as a clearer option to enter certain markets and channels where they are not now. Therefore, the possibilities that operations can materialize today is a reality that is increasing and will help transform the business fabric and evolve its level of competitiveness.