All posts by Abraham

STEPS TO PURCHASING A BUSINESS

Did a company for sale grab your attention? If you want to become an entrepreneur but feel like you do not have a base to do it, buying a company is a good option. Purchasing an existing company could be an opportunity to start a business without going through the process from scratch. As with everything, there are companies for sale that are not good buys. Therefore, there are professionals that accompany you in this journey and guide you in making the best decision.

Follow these steps to make sure you make the right purchase:

Step #1: Identify the industry you want to be in

The first step in an acquisition is defining the type of company that you are looking for. This begins with a broad decision on what industry you want to enter. You will have to investigate both the medium and long-term prospective of that sector, observe the competition, and pay attention to changes in laws and regulations. To really understand the service that the company offers, position yourself as a customer and experience it first-hand.

Step #2: Get in touch with the company for the acquisition

After a profound investigation, the next step is heading for the ideal company. While picking a company, it is important to have in mind a budget, size, location, annual income figure, and your possibilities for success. It should not offer you something you cannot handle. Therefore, counting on professionals is advised.

YOU MIGHT ALSO BE INTERESTED IN, “THE BUSINESS PLAN: THE PATHWAY TO BUY A COMPANY”.

Step #3: Start a negotiation

At this point, you already have a detailed image of the company and the industry. With this, you can begin the negotiations with the owners to come to the best deal possible for both parties. The first point of negotiation is the price – after performing a valuation. Then, you should formulate a plan for the rest of the process.

Step #4: Evaluate the company

The valuation stage in the purchase of a company is the most important to guarantee success. The assets sometimes make up the biggest part of any valuation. Depending on the company, this could be the value of the property and real estate or also the machinery and equipment. You should also not overlook the importance of the business volume, profitability, and current contracts.

Step #5: The purchase and sale agreement

The finalization of the purchase and sale contract marks the final stage of the acquisition. While both parties have already established a broad view of the purchase in general and non-legally binding terms, their purchase and sale agreement will impose legal obligations to both parties.

Step #6: The payment

There are various options to finance the purchase of a company, depending on the size and scale of the purchase. A large-size purchase (e.g. a multinational) could be a more complicated operation due to several factors. For a smaller-sized purchase, the most common payment method is net payment. The payment could come from private funds, investors, banks, other lending entities, etc. Sometimes, the actual owners may give up complete control of the company in the sale but only receive a percentage of the company value when sold – in exchange for a continued share of the company profits.

Conclusion

After these six steps, when the final documents are completed, contracts are signed, and payment agreement is official, the acquisition is complete. This process can be slow and take a lot of work; therefore, it is important to know that there are companies like ONEtoONE that can guide you and accompany you in the process.

YOU MIGHT ALSO BE INTERESTED IN, “THE STRATEGIC PLAN: THE KEY TO CREATING VALUE IN THE PURCHASE OF A COMPANY”.

This article was written by Enrique Quemada – President of ONEtoONE Corporate Finance.

React to your need for capital before it is too late

React to your company’s need for capital before it is too late!

The need for an increase in capital to stay competitive is very common. It is possible that the business owner, especially when he or she is already in an advanced stage of life, will not be willing to reinvest capital that has already been extracted from the company and, before this, he prefers to exit the company.

The need for capital

If there has been, for example, a deterioration of capital from losses or because the company’s assets are arriving to the limit of their useful life there is a need for investment in modernization. Other times the company doesn’t generate enough free cash flow to undertake the investments. It needs to be competitive in an evolving business environment.

We had a client that owned a factory specializing in the manufacturing of machinery for food preservation. The company competed against large Swedish and American companies that, thanks to their investments in R&D, were constantly improving the productivity and sophistication of their machines. Our client was losing competitiveness and was destined to start seeing lower prices, yet he had a limited capacity for reinvestment. Fortunately he decided to sell before it was too late.

The company may need to invest money into soon to be obsolete technology in order to be viable, something that the owner doesn’t want or can’t do.

In some cases, slowly a snowball of debt is formed without you noticing. Equipment leases, operating capital lines of credit, equity lines and credit card bills now take up most of your free cash flow and you feel like you are working for the banks.

A third-generation business owner client of ours used to tell us, “if the interest rates go up, I am losing it all”. He ran the business that his Grandfather had started 45 years earlier, in early 2007 they decided to build a new manufacturing facility and leveraged the business to do it. Then the crash came, and interest rates skyrocketed while sales went down. They were able to survive the crisis and they continued to grow at double digit rates but their profits disappeared to service debt. We helped him refinance at better rates and then brought in a financial investor that made an equity investment which allowed him to keep growing his family’s legacy.

The time to get capital is now

If you have not been able to receive a dividend in years, a downturn in the economy can wipe out everything you worked for. We are today in a specially good moment to sell due to high prices, high liquidity and low interest rates. Do not miss this M&A wave because the next one might not come in decades – at least a wave as huge as this one.

This article was written by Enrique Quemada – President of ONEtoONE. Book: How to Maximize the price of my company

Your might also be interested in EVERYBODY IS SELLING THEIR BUSINESS; DO NOT BE LEFT OUT!.

What is my company’s brand worth?

When selling a company, business owners try to value different elements of their businesses in order to determine an appropriate sale price, including their assets, their cash flows and even their business relationships. In reviewing elements of their businesses that have value, one question that business owners often ask is, “What is my company’s brand worth?”

While the frequent references in business analyses to a company’s brand value may make it seem as through brand value is relatively straightforward to calculate, in fact determining the value of a brand can be very challenging due to two key reasons. The first is the difficulty of defining exactly what a company’s brand is and the second is the difficulty of quantifying brand value, particularly in a way that buyers will accept.

Despite these difficulties, brands are without question a very important part of a company’s overall value and understanding what brands are and how they can be valued can greatly broaden and strengthen the perspective and position of a seller of a company in the company sale negotiating process.

Understanding what a company brand is and how it is valued can greatly strengthen the perspective and position of a company seller in the company sale process.

What is a Company’s Brand?

A company’s brand, in the very simplest terms, is what makes the company unique and sets it apart from competitors. A company’s corporate individuality often is related to four types of associations in the minds of consumers or the market.

A company’s brand is what makes a company unique and sets it apart from competitors.

The first element of a company’s brand is its association in the mind of consumers or the market with certain visual attributes. This is often largely comprised of a company’s trademark or logo, but a company’s visual corporate identity can also be defined by products, containers or wrapping that may be visually unique. The “golden arches” of McDonald’s, for example, is a highly distinctive and recognizable feature of many McDonald’s restaurants.

The second element of a company’s brand is its association in the mind of consumers or the market with certain products or services. The stronger a brand is, the more a consumer will think of a company’s products or services when he or she hears or sees a reference to a brand. For example, when people hear the brand “Apple” they often automatically think of the iPhone.

The third element of a company’s brand is its association in the mind of consumers or the market with certain attributes of a product or service. For example, for a company in the luxury hotel segment, a strong brand has the ability to convey a greater sense of luxury than competing brands; for a company that is competing in a discount product segment, a strong brand has the ability to convey a better value for price than its competitors.

The fourth element of a company’s brand is its association in the mind of consumers or the market with how the company operates or carries out its business, ranging from how it treats employees, to its work in the community to its values. A brand that strongly projects these values can have a major impact on consumer purchasing decisions if consumers share those values.

Company Brand Valuation Approaches

Given how important a brand is to a company, the practical question is, how can it be valued? While there can be many variations on brand valuation techniques, brand valuation approaches are often divided into three categories.

Three common ways to value brands are the cost approach, the market approach and the income approach.

Cost Approach. The cost approach values a brand based on the amounts that were expended to create the brand. This can include amounts that were expended on brand advisors, trademark and logo designs, websites, social media outreach programs, advertising and community activities.

While costs spent on developing a brand are generally relatively straightforward to quantify, two companies that spend the same amount on building a brand can have very different sales, levels of financial performance and market positions. For this reason, cost approaches to brand valuation often should be viewed as providing a very limited picture of a company’s brand value.

Market Approach. The second approach is the market approach, which derives the value of a brand through a reference to other companies in the market. One way to do this would be try to derive the value of a brand by considering the value of a similar brand, but this in practice can be difficult to do because every company brand is by definition unique.

A variant of this approach is to consider performance and financial differences between companies in the market and analyze the extent to which these differences are attributable to brand value. For example, if one company sells coffee for $3.00 a cup and another company sells coffee for $5.00 a cup, if all other things are equal it could be argued that the difference in the price of coffee is attributable to the strength of the latter company’s brand.

Of course the relationship between certain financial drivers, such as product price, and brand value have to be considered very carefully because a company may hold price down for certain periods of time to try to gain additional market share.

Income Approach. The third approach is the income approach, which derives the value of a brand based on the value of the income or cash flows of a company that are attributable to its brand. If its costs two companies the same amount to produce a cup of coffee, and one company has free cash flows that are 10% higher than the other company, it could be argued that the present value of the difference between the two sets of cash flows represents the value of the company’s brand.

Conclusion

Brand valuation is perhaps more of an art that a science, and without a doubt it can be very difficult to value a brand precisely because of its intangible and unique nature. Further, converting the intangible elements of a brand into tangible financial components of a business’ value in sale negotiations is challenging because of the many factors that can contribute to differences in company performance other than its brand.

Despite the challenges involved in brand valuation, brands are an important part of a company’s value and trying to analyze a brand’s value is an important part of the analysis of the overall value of a business.

This article was written by Darin Bifani.

You might also be interested in THE VALUE OF NOTHING – HOW TO ACCURATELY CALCULATE A COMPANY’S VALUE.

Everybody is selling their business!

The M&A wave is rampant. Never have prices been as high as today. Never has there been so much liquidity in the system. Never have interest rates been so low, so never has it been this easy to borrow money. Hence, we could say everybody is taking the chance of selling their business.

The M&A wave of today

At the same time, the fate of individual companies has never been more uncertain, and the window of opportunity is closing for many companies unprepared or unable to adapt to the new market realities.

The current technological revolution is defining the fate of many companies: Unmet customer expectations are resulting in churn; the lack of digital transformation gains is translating into loss of market share; industry lines that protected some are crumbling; the longstanding, durable business models are failing.

In life, change is unavoidable, but in business it is vital. When the speed of change outside your company is greater than the speed of change within it, the end is just a question of time. Today, new business models are emerging, which are allowing the revolution of sectors.

When to sell your business

It is very common that business executives do not want to sell their company when it is making the most profit and will when it is going through a crisis. This is a clear mistake. For those who have taken the risk of entering the entrepreneurial world, selecting the right moment to exit is one of the most important and delicate moments in the life of a company and, hence, where there is the greatest need to act the most professionally.

Today, money is abundant. The value of companies in the stock market have never been higher, interest rates worldwide are at the lowest levels ever seen, and there is a huge M&A wave. Ride the wave before it goes and you regret it.

This article was written by Enrique Quemada – President of ONEtoONE. Book: How to Maximize the price of my company

Your might also be interested in “WHAT SKYDIVING AND SELLING YOUR COMPANY HAVE IN COMMON”.

Handeling an MBO: Buying a company as an executive

As an executive in a company, such as its manager or director, you might think that the owners of your company would want to sell it to a third party instead of to you. On the other hand, there are a series of reasons that make it more logical for them to choose you for an MBO (management buy-out).

“A bird in the hand is worth two in the bush.” – Spanish proverb

Why the business owner would rather sell to one of its executives (MBO)

The first reason is the confidentiality. This way, they do not publicize the sale of the company and can avoid unnecessary gossip from the competition. If an executive of the company is considering purchasing it, he or she will not play games because they know that their job is on the line.

On a different note, the executive knows what he or she is buying and will find less risk than an outsider. This will make the company more valuable to the executive (he or she is familiar with the company being bought so will discount less for risk).

Similarly, because the executive knows the company well, he or she will not have to do a very exhaustive due diligence, so the process could be much quicker.

When the buyer is that company’s executive, there is much less risk of the operation falling through due to misunderstandings because there tends to be knowledge and trust between the parties and will thus be able to find a way to reach an agreement. The business owner saves him or herself the arduous process of looking for, convincing, negotiating, and selling to an outsider.

The executive gives a guarantee of continuity for the company that outside buyers do not. The employees, suppliers, customers, and banks know the executive.

Therefore, even though the process is competitive, executives have more advantages because they better understand the value of the company and the maximum price that should be paid for it. The other potential buyers know this, and if there are business executives who are also contenders for the purchase, they tend to pull out from the process.

Managing the conflict

In an MBO, there is an inherent conflict since you are both the buyer and the manager/director.

The best way to deal with this problem is by being professional and working on the purchase outside of your business hours.

Another conflict is the price, your natural interest would be to buy it at the lowest price possible. However, you are taking a lot of risk; your job and the purchase are both on the line. Therefore, I recommend that you be careful not to let yourself be overtaken by greed, that you establish a fair price, and that you back it up with facts and data.

If you see any point of conflict, openly show it to the seller and create ways to find solutions. This way, you will have the confidence to find ways to fight the problems that may arise in the negotiations.

This article was written by Enrique Quemada – President of ONEtoONE Corporate Finance

Your might also be interested in “THE BUSINESS PLAN: THE PATHWAY TO BUY A COMPANY”.

Do you have a clear profitability model?

The profitability model explains how a company makes money while creating value for the client at the same time. The business model should not only help you to serve your client distinctively, it must also pursue that the company gain a high return for shareholders.

How to identify your profitability model

The DuPont formula helps you to make decisions on strategy and business model, because it combines the three components for creating value: margin, efficiency (asset rotation) and indebtedness (balance structure).

ROE = Margin * Asset Rotation * Balance Structure

This translates into:

ROE = (Profit / Sales) * (Sales/Assets) * (Assets/Equity)

You must understand which of these three elements is your true engine for creating value, and know how you must compete. You must identify your profitability model and be coherent with it. There are companies that compete through their high sales margins (Google). Others, through asset rotation (Wal-Mart) or through leverage, by using little capital and large debt (Banks).

What does the DuPont formula mean?

Margin (Profit / Sales): tells how much money I make as profit for each dollar I earn. It´s the result of income minus expenses. Anything that lowers costs and increases income improves the margin.

Efficiency (Asset rotation): allows you to know how much money you make for each dollar in your balance. There are companies that make money by rotating merchandise several times a year. If you have a low margin for each product unit you sell, but sell it many times, you end up making a lot of money. This is what happens in large supermarkets.

Balance structure (Assets/Equity): allows you to make money with a smaller investment, since cost of debt is lower to the cost of capital.

Return on equity (ROE) is the result of the income model (how much it charges and how it charges it), the cost structure, the margin per customer and the speed of use of resources.

Once you have chosen a profitability model, shape your business model in alignment with it and don´t take any contradictory decisions.

This article was written by Enrique Quemada, ONEtoONE President.

Your might also be interested in “THE SEARCH FOR CAPITAL AND FIVE LEVELS OF INVESTOR TRUST”.

The Search for Capital and Five Levels of Investor Trust

When many entrepreneurs and businesses search for capital, they often understandably place the greatest emphasis on presenting a compelling business case to investors with a clear path to strong investment returns. While this is of course always very important, particularly when making investment pitches to investors that a company does not know well, a key factor in securing investment capital is creating a solid base for lasting investor trust. If investors lack trust in a company, they will rarely invest, regardless of how great the investment opportunity looks on paper. There are five key levels of trust that entrepreneurs and businesses should strive to create during discussions and negotiations with investors.

Trust in Company Information

The first level of trust relates to information that a company provides to an investor about the company itself. Most investors will conduct significant due diligence regarding a company before investing, but regardless of how thorough a due diligence process is, there will almost always be uncertainties regarding the accuracy and completeness of information.

Companies looking for investment capital should be sure to conduct conversations with investors in a way that investors come to feel that they can trust the information that has been provided to them about the company. In addition to confidence regarding basic facts about a company, such as its general corporate and financial information, this also includes creating a sense of trust regarding information about company business drivers that can be less susceptible to objective quantification, such as the level of motivation of key employees and the strength of client relationships.

Trust in Market Analysis

The second level of trust relates to information that a company provides to an investor regarding relevant market conditions. Many investors consider investment opportunities in markets where they do not have a direct presence and they are not thoroughly familiar with local operating realities. In these situations, investors will be concerned that companies have not clearly presented all relevant market factors or have not demonstrated how these factors in practice will impact a business model or investment opportunity.

For this reason, companies looking for capital should be careful to demonstrate to investors that they have brought to the investor’s attention all key market factors that may materially affect an investment, both good and bad, and discuss how the company will address those market factors. While it may seem as though “bad” market factors will always be a negative check mark in an investment review, the reality is that every business model faces negative market factors and the companies with the best investment proposals often are those that can demonstrate that they can face these factors better than their competitors or even turn those factors into an advantage.

Trust in Care of Investor Capital

The third level of trust relates to the care of the investor’s invested capital. An investor takes a very large risk in leaving its capital in the hands of a company, not only with respect to the investment return that will be obtained, but also regarding the basic issues of ensuring that the capital that will be provided will be used by the company as agreed, that all business cash flows will be prudently monitored, that proper cash deposit and banking relationships will be in place and that all necessary procedures will be established so that distributions of capital to an investor will occur as agreed in investment documentation.

Because of this, companies that are raising capital should strive to demonstrate to investors that they will put in place all necessary procedures and maintain all necessary relationships to ensure that investor capital will be protected throughout the entire time that it will be under the company’s control.

Trust in Care of Investor Reputation

The fourth level of trust is related to the investor’s reputation. In addition to its capital, a very important asset of an investor is its reputation in the market. Regardless of the oversight mechanisms that an investor includes in investment documentation, a company will always be able to take actions that can reflect negatively on an investor, including with respect to how a company it treats its employees, its relationship with third parties and its broader role in the community.

Given the importance of these issues, companies searching for capital should strive to demonstrate to investors that they are familiar with investor compliance and reputation concerns and that they will carry out their business activities at all times in a way that reflect positively on an investor.

Trust in Business Management

The fifth level of trust relates to how management will run a company after an investment is made. Regardless of what stake an investor has in a company, it will depend on the company to not only carry out the agreed business plan, but also to advise the investor of risks that may affect that business plan and discuss with the investor how those risks will be addressed. Accordingly, during the phase of discussions with investors, it is important to demonstrate that the company will be highly proactive in bringing material issues to the attention of investors and deal with them in a transparent manner.

A compelling business plan is vital in searching for investment capital but “soft factors” are often equally if not more important than the numbers in getting investors to invest significant amounts of funds. Because of this, groups looking for capital should strive to conduct the process of discussing investment proposals with investors in a way that creates a strong basis for future trust. This will not only increase the likelihood of investment but also reduce the perception of investment risk, which often results in better investment terms and conditions.

This article was written by Darin Bifani. The photo for this article was taken by Dan Schiumarini on Unsplash.

Negotiation is your power when selling a business

Negotiation is power when selling a business

Power is very relative. When selling a business, during a negotiation this power will depend on your alternatives and the alternatives of the other party. Don’t forget that emotions are more than 50% of a negotiation.

Verify the power of the other party, it is normally overestimated

In a negotiation, perceptions are crucial. It’s fundamental that you understand the other party’s perceptions and that you keep them in mind. Once you know your interests and your limits do the same with the other party. A negotiation is a game of information and information gives you power. Try to understand your needs instead of your wishes.

There are many ways to discover the other party’s interests. Sometimes, it surprises me to see how little homework business owners do in such an important situation. If the buyer has acquired other companies, you should analyze how those deals were, in what conditions he bought, the multiples he paid and why he was interested in the company. All this information is worth a lot, so if you don’t have time to find it all out you should subcontract someone.

ONEtoONE negotiation experience when selling a business

Some years ago, we had a sale mandate for a French company. They had an offer from a big private equity firm that was doing a buildup (concentrating a sector via acquisitions) of its sector. Our client had already verbally negotiated with them for a price of 20 million Dollars, but they didn’t know how to continue with the process, so they asked for our help. We asked him for permission to reopen negotiations and he agreed. The first thing we did was to study all the deals the buyer had done in other countries and the multiples he had paid. We also studied how much money the private equity firm had for the consolidation project, they had spoken about it to the press. When we began negotiations, we already knew how much they would be willing to pay and what role our client’s company played in the consolidation process. We even thought we knew how the announcement of the transaction would affect its price in the Stock Market. All of this let us increase the asking price to 42 million Dollars. As we were flying back, the buyer rang our client and told him we had been very hard in the negotiation and asked him to agree the price of 40 million Dollars. Our client accepted the offer and we didn’t have the strength to go back for the 42 million!

This experience taught us that business owners have to be very careful with any concessions they give. If you have professional advisors working on the negotiation for you then don’t make any “spontaneous” interventions unless agreed upon and prepared in advance. Naturally, you have more power when you have alternative options, so before giving exclusivity you should clarify all the important aspects of the agreement. Once you give exclusivity and start negotiating with one sole buyer, you will have less negotiating power and the ‘power’ will be on the other side.

The person who is most comfortable with the current situation has the most situational power; the person who needs more change will have less power. The key to understanding who has the most power or leverage in every moment is to analyze which party has the most to lose in this moment if there is no agreement. The person who has the most to lose has less situational power. Your mission is to manage the situation so that your counterparty has more to lose than you.

The situational power

There’s a point in which you have more situational power: it’s when the other party makes an offer and you don’t accept, it’s the moment in which you have the strength to improve the negotiation, you have the most leverage.

I recommend that every time you receive an offer you act alarmed, as if it seems low to you. This will mean that the other party will give in a bit if he can or he remains satisfied with what he’s got if he can’t give in.

Always remember that situational power is based on perceptions, not on facts. You have leverage if the other party thinks you do, if he thinks you have a strong position then you have it. Therefore, be careful with what signals you give off.

If you want to learn more about it, feel free to listen to our new podcast:

This article was written by Enrique Quemada – ONEtoONE President

Your might also be interested in “WHAT SKYDIVING AND SELLING YOUR COMPANY HAVE IN COMMON”.

Buying a business with a financial partner

When buying a business, you are going to marry that financial partner, so you better do your homework when choosing one.

How to choose the right financial partner

If you choose the wrong financial partner, your life as an executive in that company could be hell. Therefore, the first thing that we recommend is analyzing several of them. There are more so many Private Equity firms and family offices (family-owned investment groups). Do not only focus on their economic capacity and initial chemistry. Study the operations that they have done previously, speak with the directors with whom they have worked, and ask them how they behave in good and bad times to determine what their relationship style is. Do not make a wild guess. Choose four or five that fit with the requirements that you look for and concentrate on negotiating with them. On the private equity websites, you should be able to see the sectors and the market sizes they invest in and what companies they have invested in previously.

Trustin the financial partner is fundamental. Dedicate time to study the investment team, analyze their culture, their philosophy, and look to see if they are pressured, anxious, and understand the day-to-day realities of the companies or if they are just financial analysts who look at Excel sheets. In your conversations with them, do not leave room for ambiguity. Get concrete answers for your questions: Who will lead the communication with you? How will they supervise you? What happens if you do not comply with the business plan? What is their exit plan? Are they going to let you run the company or will they be involved? Are they harsh with the managers or do they know how to reward effort? Check with the other companies they have invested to see if their answers are honest. If there are things that do not make sense or do not align with you, do not go with them; find other investors. There are a lot of private equity firms and you will have to be with the one you marry for the rest of your corporate life. As in all sectors, there are great firms and not-so-great ones. Try to find the former and negotiate with them. Once you have located them, try to make them compete with others for the deal. If the company and the business plan are good, you will achieve it.

If you want to reach a favorable deal for you, competition is key. When you negotiate only with one party, they will have all the power and you will be the weak link. When you reach this point, it is important to already have established a great partner agreement. The more work you put into the operation, the better. If you present the operation to a private equity firm without preparation, you will have much less power. If you have a comprehensive team and present a very clear strategy, you will be able to obtain more percentage of the capital because you will create more value for the operation. Do your homework before looking for a partner.

How to reach a favorable deal with a private equity firm

In respect to Private Equity, credibility is the fundamental factor. If you want to be successful with them, prepare yourself very well and it will all be very coherent. Do the math – the balance predictions, various accounts, and the expected profitability for you and the financial investor. Only this way can you show that everything makes sense. It will also help you understand the opportunity that you have in front of you and if it is worth it to go on that journey.

To do this, it is important to put your trust in Mergers & Acquisitions advisors so that they can help you locate the venture capital entity that is the most appropriate for you and to create that competition. They will also help you structure the operation. You can prepare your agreement so that the financial investor pays the advisor fees for having introduced you to them.

Financial investors and MBOs

Financial investors are very attracted to management buyout operations (MBOs) for the following reasons:

-They minimize risk. Directors already know the company and the problems that it has. There is less risk of surprises

-Venture capital wants quick profitability, in four or five years. If they put in new management, with the time it takes for them to familiarize themselves with the company, they have already lost a year, which is very precious time for the financial investor

-The director knows what he or she is doing. He or she knows where the management errors were made and where the opportunities lie

-Directors take a gamble investing their money in their business, which will make sure they are aligned with the management and the investor maximizes profitability

-They already have a relationship with the employees. They will be accepted since they are already in charge

This article was written by Enrique Quemada – ONEtoONE President

Your might also be interested in “THE BUSINESS PLAN: THE PATHWAY TO BUY A COMPANY”.

Deal advised in the tourism and ICT field: Grupo CMC acquires Brújula

Grupo CMC acquires Brújula, positioning itself as the business solutions provider of reference in the tourism sector

Grupo CMC, a Spanish consulting firm in the Information and Communications Technology (ICT) field, becomes one of the leading suppliers of technological solutions and ICT services for the tourism sector, with the integration of Brújula – Information Technologies , founded in 2000 and one of the most renowned firms in this market. The counsel of the mandate was ONEtoONE Corporate Finance.

Important M&A deal in the tourism and ICT sector

This acquisition will provide synergies to Grupo CMC with regards to the tourism sector, taking advantage of the strengths of both organizations. Thus, Grupo CMC will add positioning and technological specialization of Brújula in the tourism sector to its experience in technological solutions to transform businesses in the digital economy. In its portfolio, Brújula has leader companies in this sector as clients, as well as a very consolidated presence in the Balearian business network.

Through this acquisition, Grupo CMC will offer cutting-edge technology to the turistic sector. The company is already consolidated in other sectors like Telecommunication, Utilities, Infrastructures, Automotive and Retail, integrating IoT solutions, Artificial Intelligence, big data, advanced analytics and Cybersecurity

Goals of the deal advised by ONEtoONE

In this context, Grupo CMC wants to take part in the Spanish tourism sector’s international growth. The Group is already present in Portugal, Italy, Mexico and Colombia.

Grupo CMC closed 2017 with a 36,3 million Euro turnover and, according to the economic forecast, the tourism business will represent 18% of the total turnover, and by the end of 2018, they will amount to a figure greater than 56 million Euros.

Grupo CMC increased its number of staff and now employs 820 professionals who are now working for the company. In 2016 they employed 750 professionals. Through this acquistion, their staff has grown by 150.