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Ride the wave

1 December. 2016 Tags: , No Comments

Every company has an optimal time to be sold and it is vital to endeavor to know when this moment is. If you are aware that this optimal selling moment will come, you won’t have to regret missing out on it.

Mergers and acquisitions come in waves. Certain circumstances provoke a large number of corporate transactions in big, medium or small companies in any period of time.

If you see an increase of M&A activity in your sector, it might be the moment to take advantage of the opportunity and ride the wave.

Access to credit plays an important role as a catalyst for corporate transactions. The possibility to get debt cheaply due to low interest rates results in more corporate transactions.

When companies are worth more they can also buy companies at higher prices by paying in shares. Overvalued stocks are then exchanged for undervalued securities or assets. This happens mainly when companies trade at higher multiples in the stock market.

Today there is an excess of liquidity in the world and easy access to cheap debt for anyone asking for loans or credits. This results in an increase in the price of assets, stocks and property, which creates a general feeling of wealth.

Having money and access to cheap credit means that companies are willing to get into debt in order to buy other businesses. That´s why we are reaching record highs of acquisitions.

In recent years, especially due to globalization, competitive pressures have accelerated the need to quickly identify the right time to sell the company.

Not selling a company when there are strong motives to do so can end up causing a loss in company value or company closure. In many cases letting a window of opportunity pass by has ended up in bankruptcy.

The important thing is to realize that selling your company is an option and that certain circumstances will make the sale very convenient. In this case, a timely decision will help create personal and economic value.

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