KCM, the Spanish rubber industry manufacturer has sold their company to the Italian group COLMEC SPA. This joining of forces by COLMEC and KCM, which was advised by ONEtoONE Corporate Finance, aims to provide complete solutions in elastomer processing.

This acquisition of KCM by COLMEC aims to strengthening both companies. On the one hand, the COLMEC GROUP expands its portfolio of mixing solutions by acquiring the knowledge, installed base and maintenance of KCM’s internal and external mixers.

About the seller: KCM

KCM is a Spanish company, based in Barcelona, dedicated to the design and manufacture of machinery for the rubber industry. The company was founded in 1989 by Francesc Vilella. The company has a strong international presence, where more than 50% of its activity is destined for export. They supply complete lines for the processing and transformation of rubber, as well as complementary equipment that optimise existing machinery to achieve higher yields and reach the best quality of the manufactured product.

Their product lines are basically: Internal mixers, Cylinder mixers, Filtering machines, Hydraulic presses, Extruders and Complete extrusion lines. The company has two types of customers: Manufacturers of rubber or plastic mixtures and Manufacturers of profiles and pipes.

About the buyer: COLMEC SPA

COLMEC SPA is an Italian company founded in 1973, being a world leader in the design and construction of high technology extrusion and mixing lines for rubber and silicone. Today the company is focused on the manufacture of rubber processing plants, from blending to packaging and processing of silicone.

In 2008 it set up a Technology Centre dedicated to research and development activities and customer trials. In 2011 it opened an office in Connecticut (USA) and has since added new companies. With this incorporation COLMEC SPA wants to position itself in the Spanish market and complement its product line.

The advisors: ONEtoONE Corporate Finance

This acquisition will provide KCM with greater market penetration by offering commercial solutions that the company did not have until now.  The company is now able to offer complete solutions for rubber processing, from mixing to finished product.

This operation has been led by Bernar de la Hera and Ignacio Trigo, from ONEtoONE Corporate Finance Spain.

The Colombian raw materials provider Localpack S.A., has acquired Gatepharma Soluciones en Innovación Farmacéutica SAS. This operation was led and advised by our Colombian team at ONEtoONE Corporate Finance.

This transaction will allow Localpack to increase its depth in the Life Science market and consolidate its growth strategy. Gatepharma Soluciones‘ team, now as a Localpack company, will be able to significantly increase its level of commercial activity and relationships with customers and partners.

It will also allow pharmaceutical companies in Colombia to have a supplier with excellent financial and logistical strength, framed by the highest standards of service and availability.

About the buyer: Localpack S.A

Localpack S.A. is one of the fastest growing companies in Colombia in the specialty chemicals distribution business, this is the third acquisition we have executed for them in less than 4 years.

They offer raw materials for industries specialized in coatings, adhesives, lubricants, construction additives, pharmaceuticals, food, animal nutrition, agrochemicals, plastics, rubbers and more.

About the seller: Gatepharma Soluciones

Gatepharma Soluciones is a company located in Medellin Colombia with 22 years of experience in the distribution of excipients and active ingredients for the pharmaceutical industry.

Established in 2014, it is a pharmaceutical solutions company focused primarily on pharmaceutical ingredients, modified delivery products and innovative finished products.

The advisors: ONEtoONE Corporate Finance

This operation has been led by Simon R. Barth of ONEtoONE Colombia.

Cegid Primavera, the Spanish business management solution provider has acquired 100% of Informàtica3 from its two founding partners, who will remain with the company during this new phase. This operation was advised and led by ONEtoONE Corporate Finance.

Cegid Iberia – Grupo Primavera incorporates with Informàtica3 a portfolio of 4,000 customers and more than 35,000 users, including entrepreneurs, consultants, managers, retailers, hoteliers and restaurateurs, thus accelerating the consolidation of the business software sector in Spain.

About the buyer: Cedig Iberia

Cegid is a leading global provider of cloud-based business management solutions for the Finance (Treasury, Tax and ERP), Human Resources (Payroll, Talent Management), Accounting, Retail, Entrepreneurship and Small Business sectors.

With a strong international ambition, Cegid has 4,400 employees and distributes its solutions in 130 countries with offices in 22 countries. Pascal Houillon, CEO of the company, joined Cegid in March 2017. Since the Silver Lake fund took a stake in its capital, its ambition has been to boost its inorganic growth outside France, its core market.

In the Iberian Peninsula, Cegid is a leader in Cloud business management solutions and has more than 1,300 employees, 700 partners and a pro-forma turnover that is expected to reach €169 million this year.

About the seller: Informàtica3

With more than 40 years of experience and headquartered in Girona, Informàtica3 is a leader in creating software solutions for business management aimed at small and medium-sized companies seeking to optimise their information processes.

Its mission is to offer a product that is close to end users, facilitating the administration of their company with programmes that, characterised by a high level of technological knowledge and simplicity of use, exceed the requirements of multiple sectors and environments. With more than thirty years in the management software sector, they have brought extensive knowledge and commitment to what they do.

Its integration into Cegid Primavera‘s portfolio of solutions will boost the growth of the company, which currently employs around 20 people and expects to achieve 3 million euros in sales this year.

The advisors: ONEtoONE Corporate Finance

This latest acquisition follows the recently announced acquisition of Gestión Remota, with which Cegid continues to consolidate its position as the leading global provider of cloud-based business management solutions in the Iberian Peninsula.

This operation has been led by Bernar de la Hera and Ignacio Trigo, from ONEtoONE Corporate Finance Spain.

There have been predictions that 2023 may be a year of highly valued mergers and acquisitions as more industries such as biotechnology and biopharmaceuticals begin to enter the M&A world after having lost patent exclusivity and facing market competition from cheaper generic and biosimilar products. In this article, we’re looking over the biggest M&A deals of 2023.

Similarly, the breakthrough in digital technologies and artificial intelligence (AI) not only offers companies the opportunity to bring new innovation into their portfolios but to access the tech and data tools. These can transform and improve their entire operating models to deliver better-personalised care through virtual and remote channels.

Here are the largest recent M&A deals predicted to, or already closed, in 2023.

The biggest M&A deals of 2023:

5. Advent acquisition of Maxar

Deal Value: $6.4 billion.

In December, news broke that Advent was acquiring Maxar, a space infrastructure and imagery company, in an all-cash deal.

At $53 a share, the price paid by Advent represented a 130% premium above where the stock had been trading.

In addition to providing excellent value to the Maxar shareholders, the executive team at the space infrastructure firm said that it would enable them to make vital investments in Legion seven and eight satellites and other technologies under development.

Why not have a look at the biggest M&A deals in 2022 here?

4. Thoma Bravo acquisition of Coupa Software

Deal Value: $8 billion.

This $8 billion all-cash transaction was agreed upon in December. Coupa is a cloud-based business software firm whose shareholders before the deal closed included the Abu Dhabi Investment Authority (ADIA).

The price of $81 per share in cash represented a 77% premium to the unaffected stock price. On closing, the Coupa Software management team stated that they had weighed the options of continuing as a standalone business or accepting the Thoma Bravo offer, and accepting was the clear winner, giving the company access to the latter’s resources as well as “accelerating the vision to transform the office of the CFO.”

3. Japan Industrial Partners Inc., Suzuki Motor Corp. and ROHM Co. Ltd. acquisition of Toshiba Corporation

Deal Value: $16.23 billion.

A conglomerate that includes Japan Industrial Partners (JIP) is currently in talks with banks and other finance providers to ensure that it has the resources to bring Toshiba, the world-renowned Japanese diversified technology manufacturer, private in 2023.

Toshiba’s businesses include everything from nuclear power to defence technology and microchip manufacturing. Any potential acquisition would be another nail in the coffin of the famed keiretsu, the group of Japanese conglomerates that once looked set to take over the world one business at a time.

2. Johnson & Johnson’s acquisition of Abiomed Inc.

Deal Value: $18.04 billion.

Johnson & Johnson, the world’s largest healthcare products company, announced at the beginning of November that it was to acquire Abiomed. The company is a world leader in heart, lung, and kidney support technologies.

The price of $380 per share agreed between the two firms represents a 50% premium over Abiomed’s trading price at the time the deal was announced. Johnson & Johnson pitched the deal as positioning it as an innovator in the cardiovascular space, what it described as one of healthcare’s largest unmet disease states: heart failure and recovery.

J&J’s stock price spiked by close to 8% on the deal’s announcement suggesting investors think this deal promises big things for the healthcare giant.

1. Broadcom acquisition of VMWare

Deal Value: $61 billion.

The scale of Broadcom’s proposed acquisition of VMWare, first announced in May 2022, underlines why the deal is only projected to close in 2023. Broadcom has spent the second half of 2022 conducting due diligence and communicating the benefits of the deal to VMware’s customers and partners.

The deal was sold to these stakeholders on the basis of VMware’s multi-cloud offerings and Broadcom’s diversified software portfolio. This created a sort of one-stop-shop for “the incredibly complex IT landscape”.

Did you find that interesting? Read our article on 2021´s biggest M&A deals here.

2023: a great year for M&A deals

Already in 2023, we have seen companies begin to adapt. They have changed the way that they structure deals to use market volatility to their advantage and minimise costs to the best of their ability. At ONEtoONE Corporate Finance, we look forward to seeing how the industry will continue to grow and diversify.

About ONEtoONE

If you are considering selling your company, ONEtoONE Corporate Finance can help you get the best deal possible. We are a global firm dedicated to providing the highest value services to our clients through transparency and professionalism.

ONEtoONE is specialised in international middle-market M&A advisory. We have participated in more than 1500 mandates and we continuously improve our techniques to achieve the best possible price for our clients. We advise on mergers and acquisitions, strategic planning, and valuation. If you need advice for any possible corporate operation, do not hesitate to contact us.

There are things that we often only do once in our lifetime, and perhaps wanting to sell your company is one of them, so when an entrepreneur considers selling their company, they have a lot of doubts. Even as many as when they founded it. At ONEtoONE, after more than 18 years advising on the sale and purchase of companies, and with thousands of sales orders, we have compiled the 5 most common questions that our clients have asked us when selling their company.

We all want to minimise mistakes when making important decisions in our lives. How much will it cost me to sell my company? Is this the right time? Who can I rely on to help me earn as much as possible? And, above all, is it the right time to sell? Yes, now more than ever, it is. We clear up your doubts so that you don’t miss this opportunity.

1. How much is my company worth?

Short answer: whatever a buyer wants to pay. Long answer: it depends on how you balance the concepts of value and price and which buyers you can reach.

Strictly speaking, the price of a company is the amount for which two independent parties agree to carry out a purchase and sale transaction, and this amount is fixed during the negotiation process. This happens after an analysis of the company’s figures and the market. To do this, you need to know how to access this information and weigh it up.

To get the best price possible, you need to know what the value of the company is, which is a subtle concept.

In order to clarify the balance between the value of your company and the price you can obtain, a professional valuation is an essential first step.

The right buyer will understand what your company is worth and will pay what it deserves. In general, foreign companies trying to enter new geographic markets are willing to pay more. However, contacting such buyers can only be achieved with an international network.

A professional advisor will know which of the various valuation methods is right for your business. He also will be able to get the highest possible price for its value.

Read more about: How to get the best price for my company.

2. When is the right time to sell my company?

The time you choose to sell will make a huge difference to the price you can get. Is it the right time to sell my business?

Matching personal, business and economic factors at the right time is the key to knowing when to make the best decision. The time you choose will also influence the time it takes to successfully complete the sale.

You need to know how to spot a window of opportunity. At the moment, there is still a lot of liquidity. Large financial and international groups are looking for growth through acquisitions.

But keep in mind that windows of opportunity also close. It may be a long time before another one opens. All indicators seem to point to a future recession. Those who do not sell now may not be able to sell at current prices for years to come.

If you believe that your personal motives and your company’s current momentum are aligned to maximise the value of your company, the time is now.

Read more about: When is the best time to sell my company?

3. How do I sell my company?

You are undoubtedly a specialist in your business and your industry, but entrepreneurs usually only sell their businesses once in a lifetime. If you know how to manage your business, an advisor knows how to sell it in the best way.

Buying and selling a business is a science in itself. You have to know the timing, the process, the prices, the state of the market and mastering negotiation. Also, you need to know how to handle the paperwork and documentation. In addition, you have to know how to find the buyer who can pay the most.

You are probably not familiar with the stages of a sales transaction or the most common concepts. Once you have decided to sell your company, a process begins that will be led by your advisor, who will guide you through the initial phase of documentation and valuation of your company, the search for the ideal buyer, the due diligence process and finally the negotiation of the sale and purchase agreement.

Several concepts are decisive for the success of the operation. Some of them are the confidentiality of the entire process and the exclusivity of the advisor, who will guarantee confidentiality.

Your job during the sale, which may take a long time, is to focus on your company in order to strengthen its value. Maintaining its profitability will determine the price and the closing of the transaction.

Read more about: How to sell a company 

4. How much does it cost me to sell my company?

This is one of the first questions entrepreneurs who think of selling their company ask themselves. It does not have a simple answer as it “depends” on many factors, among others, on the advisors that come into play.

It should be clear to you that for a once-in-a-lifetime transaction in which you have no experience, it is more advantageous to rely on professionals. Having at least one M&A advisor, a lawyer, and a tax advisor are the professionals we recommend.

As for the first one, advisors in the sale and purchase of companies usually work with a fixed fee and a success fee. This advisor is of vital importance because he will ‘create’ the operation. Their fees are usually a percentage that will depend on the size of the transaction; the higher the transaction value, the higher the fees, so the alignment with the client’s interests is maximum. Success rates can range from 1% for large transactions to 6% for small transactions.

As for lawyers and tax advisors, they usually enter the transaction when there is already a first agreement between buyer and seller. Their fees are usually fixed for the amount of time they will need to spend to underpin the transaction. Again, depending on the complexity of the transaction, their fees can vary in a very wide range, nowadays, between 25,000 and 100,000 euros.

If you have ever heard the saying “being cheap can be an expensive mistake”, you will find no better application for it than in the case of the sale of a company. You may save some money if you don’t hire these professionals, but the benefits you get from their services will more than cover this expense.

Read more about: How much does it cost to sell my company?

5. Who can I trust to sell my company?

You have dedicated your whole life to your company. You have built up your wealth with it. When it comes to selling it, you are not going to put it in the hands of someone who does not understand its importance and what it means to manage your wealth.

You wouldn’t go to a family doctor if you needed a cardiologist, even if the cardiologist charged more or lived further away. Just as you would not put your health in the hands of a non-specialist doctor, you would not put your wealth in the hands of someone who does not know how to move it without making a loss.

Selling a company is a technical and financial job with a lot of research and strategy behind it. When dealing with such matters, we need to be able to trust the person in front of us. Make sure you trust for the right reasons. Sure, you can trust the family lawyer or a lifelong friend, but not place on them the enormous responsibility of carrying out a complex transaction that they have never done before.

It is worth spending some time looking for and finding someone you can trust to sell for the right reasons. And in this type of transaction, ask yourself, what arguments justify your trust? You can certainly rely on an advisor who:

• Has proven and successful experience in selling a business.
• Understands your family, financial and personal.
• Has your best interests at heart.
• Has access to buyers who can pay more and better.
• It is legally and contractually bound to handle the transaction with confidentiality.
• Treats you humanely and honestly.

The reality is simple: to sell your business, you need the help of a professional who specialises in business sales.

The value provided by specialist business sale and purchase advisors will be reflected in the price you get. To do this, they will help you get your business properly prepared, locate the highest paying buyer wherever they may be and help you manage the paperwork in the right way, as well as preventing any mistakes you might make.

Read more about: The role of the advisor in the sale of a business

About ONEtoONE

ONEtoONE Corporate Finance is a global advisory firm specialising in the sale and purchase of companies in all sectors. Our successful experience with more than 1,700 mandates supports us in advising on any issue related to the details of transaction closings.

If you are interested in considering the sale of your business and need professional advice, please do not hesitate to contact us. The window of opportunity is open – we’ll help you get through it!

What role does the earn-out clause play in the sale of a company?

In a company selling negotiation, it is rare that the buyer and seller agree on the price since each party’s expectations for future earnings do not always align. The seller seeks to maximize the company’s potential while the buyer is particularly concerned about the dangers associated with the acquisition, which causes a considerable disparity in what each party anticipates the price to be. It is for this reason that using the earn-out clause in the sales agreement as a payment method might be preferred by both parties.

The earn-out clause, which may be included in company purchase and sale contracts as a payment method, establishes that a portion of the transaction price will be variable and will depend on how the acquired business performs for a specified period of time after the sale.

What does the earn-out clause do?

This clause is in place to bridge value disputes between buyer and seller as well as to achieve a price agreement that is satisfactory to both parties. It is where the seller receives a fixed amount and a variable amount which depends on the company´s profit. The sale agreement should state how each earn-out is to be calculated and that the calculation be carried out by an impartial consulting company that is satisfactory to both parties. This is because certain earn-outs are based on numbers that the buyer could potentially manipulate, such EBITDA.

Your buyer should guarantee the following items after the sale if an earn-out clause is included in a selling agreement as the payment method:

• The retaining of key employees
• Not interfering with operations
• Maintaining specified capacities
• Not delocalising work
• Not disqualifying an offer
• Limiting the buyer’s personal compensation

In any event, we recommend to keep earn-outs as simple as possible in order to minimize complexity in the selling agreement.

We think you might find this interesting: The Sale and Purchase Agreement (SPA) – What should it contain? 

The advantages and disadvantages of the earn-out clause

Including an earn-out clause in company purchase and sale contracts has its advantages and disadvantages. From enabling the establishment of a fair and realistic remuneration for the company’s value and motivating both parties, to, on the other end of the spectrum, causing stalled negotiations and manipulations.

Steps to follow when negotiating the earn-out

When negotiating the profits, as a seller, you must be aware of the ins and outs. To avoid unwanted surprises, the following steps must be taken:

• Compensation

Specific events or quantifiable results should be rewarded, such as winning a competitive contract, contract renewal, new client acquisition, important staff retention, total revenue, new product or service revenue, or gross margin.

• Classification of earn-outs

Earn-outs should be classified as raises in the purchase price so that they are taxed as capital gains. Buyers will treat earn-outs as bonuses by buyers so that they are tax deductible, but to you, they are simply ordinary income.

Coherence

Profits must be compatible with the buyer’s company goals.

Permanence

If earnings are indicated in the selling agreement, if feasible, stay with the firm for the entire duration of the earn-out.

Earn-out period

We recommend that the earn-out period be two years or less except in exceptional circumstances.

Stages

Determine whether the earn-out has stages and if it is linear or non-linear, for example, a set amount for the initial increment and a decrease for the second.

Profits

You should not expect to get any of the earnings. You should consider a base selling price that compensates you for the fact that you will not get any of the proceeds.

Earn-out escrow

Consider an earn-out escrow if the buyer is a foreign entity. Escrow payments are contributions in which the money is kept in escrow or on deposit until the transaction that emerged in response to the payment is completed satisfactorily.

Flexibility in negotiations

When discussing profits, be willing to be flexible. You know more about what will be possible than the buyer, earn-outs should work in your favour. Remember that earn-outs are always contingent, and that payment ultimately rests on the buyer’s reputation and integrity.

Conclusions

As we have seen, an earn-out clause is typically used to reconcile a buyer’s and a seller’s differing business expectations.

It is a payment method whereby a contractual provision states that the seller of a business is to receive future compensation, provided the business achieves certain financial objectives.

It is clear that there are both advantages and disadvantages that can arise when using an Earn-out clause; therefore, we recommend you keep it as simple as possible, and follow the necessary steps. This will not only simplify the selling agreement but also ensure that you won’t have any unpleasant surprises along the way.

About ONEtoONE

ONEtoONE Corporate Finance has offices in Europe, the United States, Latin America and Asia. We are a global advisory firm specialising in the sale of companies like yours. All our human and technological resources, databases, experience and processes are focused on helping our clients sell their companies at the highest possible price. We help you strengthen your legacy, so you can focus on what matters to you in this new stage of your life. We can’t change the past, but we can improve the future.

Are you ready? It’s your time, we’re here to help!

As a business owner the financial state of your business is what tells you how well its doing. Because of this, it becomes a key factor in our measuring the success of our companies. Equally, a buyer will be wary of the financial state since it’s one if not the most important piece of information about your business. Preparing your financial structure is pivotal to determine your company’s value so you need to be extra careful when evaluating this crucial pillar of your company.

At ONEtoONE, having worked more than 1,800 mandates, during our experience, we’ve identified some of the mistakes that business owners make when preparing their financial state with the wrong advisor and with no advisor at all.

A balancing act

The information provided by the scorecard makes it possible to focus and align management teams, business units, resources and processes with the company´s strategies.

A balanced scorecard is a tool that facilitates management decision-making. It includes a coherent set of KPIs (Key Performance Indicators) that provide managers and area managers with an overview of the business or their respective areas of responsibility.

In case you do not currently have one. We suggest that now is the time to prepare one to help your team focus your company´s efforts in the same direction.

You may be interested in: What is the difference between the price and value of a company in a sale and purchase process?

Measuring financial performance

As the name suggests, KPIs or Key Performance Indicators are just that, a group of metrics used to assess the overall performance of a company. KPIs aid in determining a company’s strategic, financial, and operational accomplishments, predominantly in comparison with those of rival firms in the same industry.

Record keeping, processing, cleansing, and summarizing are the foundation of KPIs. The data might pertain to any division across the whole organization and could be either financial or not in nature. A KPIs’ objective is to clearly convey outcomes so that executives may make better knowledgeable decisions.

Revenue and profit margins are often the main focus of key performance indicators linked to the financials. The most reliable of all revenue metrics, net earnings, measures the amount of income that is left over as profit for a specific period after taking into account all of the company’s costs, taxes, and interest payments for that particular term. Some examples are of financial KPIs are: Liquidity, profitability, solvency and turnover ratios.

Ask yourself if your company has identified its KPIs and how often are analyses carried out.

Financial factors

When preparing the financial structure of your company, you should prepare the following financial factors:

Budget

Create a corporate yearly budget and monthly and quarterly closings. It would be advisable to mention that you maintain a monthly account audit. Estimate potential budgetary deviations and consider the reasons behind them.

Debt

If the business is in debt, you must characterize that debt as owing money to banks and other financial organizations (leasing, bondholders, invoice discounting…). Debts with partners and debts with clients differ from one another. In general, advances are seen as debt. To make it obvious how the debt will be repaid when the time comes, you must formalize the debt through loan contracts.

Properties

Evaluate the properties that are impacted by business operations. It is common knowledge that businesses control the land on which their offices are located. It occasionally even owns assets that are not required for business operations. Separating real estate activity from productive activity is necessary, and the corporation will be charged market rent.

Surplus Management

How is the maintenance of the company’s surplus management done? A cautious style of management is typical, in which the gains from prior years have stuffed the treasury rather than being dispersed. It is essential to do a thorough analysis of the working capital, often known as the actual cash requirements for the functioning of the business. The amount that can be distributed to the partners prior to the transaction must also be made explicit.

Treasury

When it comes to treasury, cash pressures are often a sign that something isn’t functioning properly. Bank loans can ease tensions, but it’s important to identify and address the root of the issue before using them. This may be accomplished in a number of ways, including by studying the cash flow (or cash flow). Manage your box by, if feasible, billing your consumers in advance to create a positive cash flow cycle.

The information in this article will help you avoid the errors that are commonly made by unadvised business owners. Likewise, we’ve identified errors during the whole preparation, negotiation and closing phases of the sale. We have condensed those errors in our free three-e-book series “Errors during the sale of a company”.

About ONEtoONE

ONEtoONE Corporate Finance has offices in Europe, the United States, Latin America and Asia. We are a global advisory firm specialising in the sale of companies like yours. All our human and technological resources, databases, experience and processes are focused on helping our clients sell their companies at the highest possible price. We help you strengthen your legacy, so you can focus on what matters to you in this new stage of your life. We can’t change the past, but we can improve the future.

Are you ready? It’s your time, we’re here to help!

María José Martínez Gil, partner at ONEtoONE, has recently been recognised by TTR – Transactional Track Record and Datasite as the leader in the ranking of the most active Financial Advisors in the Spanish M&A market by amount and number of transactions.

Background

With a degree in Economics and Business Administration (E-2) from ICADE, María José began her career at Accenture as a consultant and, from 1996, she dedicated herself exclusively to Corporate Finance.

At ONEtoONE Corporate Finance

During her career as a partner at ONEtoONE, she has brought her knowledge and experience in M&A to transactions in various sectors, in particular those related to education, healthcare, consulting, technology, food, retail and consumer goods.

She has been involved as an advisor in many projects, both in acquisition and sale transactions. International transactions have constituted the vast majority of these projects.

María José’s most recent transactions at ONEtoONE: