Tag Archives: Enrique Quemada

Slave of your own company?

Just because you started or inherited a company doesn’t mean you need to spend your entire life dedicated to it.

After many years doing the same thing, business owners might become fed up. Many have already made enough money to live comfortably for the rest of their lives and now they would like to focus on other things. This is very common.

There are numerous owners that come to see us and explain how they want a change in their lives. They don’t want to become slaves to their own company.

Two business owners came to see us and explained that after twenty years doing the same thing, they wanted to sell their business and dedicate their energy to other exciting projects.

One of them wanted to give back to society and spend his time in an NGO that he had started. The other one wanted to sell in order to devote more time to his true passion, his family. The sale also allowed him to have time for other things, like playing golf with his friends. The process of searching for buyers began, and some of the buyers demanded that the owners stay in the company for some time.

We knew that this was not an option, as our clients already had other plans for their futures, we continued searching for buyers, and were finally able to find a buyer with a skilled management team capable of replacing those eight months after the acquisition.

The sale of a company is a complex process that lasts a minimum of six months and can be extended to twenty-four if negotiations with potential candidates fall through.

Experience has shown us that the average time of a professional sales transaction maximizing the interests of the seller takes around nine months. Therefore, if you are tired of your company, it´s time to start the sale process. Do it before this period of outstanding liquidity ends.

Article was written by Enrique Quemada, Chairman of ONEtoONE Corporate Finance Group

Ramp up your exit schedule and run the wave

Mergers and acquisitions come in waves. We are in one of those waves.

Trying to sell at the point where buyers are paying over the odds is a good strategy.

Today there is an excess of liquidity in the USA, Asia and Europe and easy access to cheap debt for anyone asking for loans or credits. This has resulted in an increase in the price of assets and stocks, which has created a general feeling of M&A possibilities.

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

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.

Stock markets are at their highest. 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.

We are witnessing and increate in M&A activity and reported valuations are trending above anyone´s expectations.

If you are ponder the possibility of selling your company in the near future, consider ramping up your exit schedule to fast-track your plans.

To sell a company takes time. Don’t be too late.

Don´t forget that today negative interest rates everywhere sings a global economic malaise on the forecast and that malaise is likely to affect us all for the decade to come.

Article written by Enrique Quemada.

Mergers & Aquisitions, Compraventa de empresas

Enrique Quemada is named Advisor to the board of the Global FinTech Association

THE GLOBAL FINTECH ASSOCIATION

Financial Technology – or FinTech – is a fundamentally changing the way financial services firms operate, and transforming the way we transfer, borrow, protect and manage our money. The digital revolution of the financial industry is in full swing and will change client experience and processes forever. FinTech is changing the world of finance.

Investments in financial technology have grown exponentially in the past decade – rising form $1.8 billion in 2010 to $19 billion in 2015 – with over 70% of this investment focusing on the “last mille” of user experience in the consumer space.

The Global FinTech Association was created to address the industry’s needs and challenges, and to facilitate coordination on a global scale.

The Global FinTech Association is the main point of contact for journalist, international FinTech regulators, and other stakeholders in the FinTech world. It has a network of Angels, VCs and investors to fuel FinTech business’ growth. It recommends best-in-class investors for the best FinTech companies.

The Global FinTech Association (GFA) liaises like-minded FinTech leaders and other stakeholders on the FinTech ecosystem to exchange ideas globally, share experiencies, best practices and lessons learned from peers to avoid repeating mistakes of others.

MR. ENRIQUE QUEMADA CLARIANA

The Global FinTech Association is proud to announce that Enrique Quemada has been named Advisor of the Board. Graduate of the Harvard Business School’s prestigious three-year Presidents Management Program (OPM), Mr. Quemada holds a Bachelor degree in Law, a Master in Business Administration (MBA) from the IESE Business School and an Advanced Management Program (AMP/PADE) from IESE Business School.

Since 2004, Mr. Quemada has been the international Chairman of ONEtoONE Corporate Finance Group, Chairman of the International Mergers & Acquisitions Institute and a member of multiple boards of directors.

Mr. Quemada is a renowned author of international business books and an international speaker, professor at the prestigious IE Business School lecturing courses on Investment Banking, FinTech, Negotiation and Private Equity.

Mergers & Acquisitions, Compraventa de empresas

Many M&A “advisors” are not effective

It is normal for a business owner who thinks about selling his company to be afraid of hiring advisors.

It is a key decision, there is a lot on the line, and many things are going through his head:

“Are they really going to fight for my best interest?
Do they really have a large enough contact base to sell this?
What if they charge me a lot of money, make we work, play around and then nothing really happens?”

These are all legitimate feelings; choosing the right advisor can be the difference between being able to sell your company or not, between maximizing its value or selling it poorly.

It is true, a lot of “advisors” don’t do an effective work. They are good at documentation, valuations, analysis, etc. But they don’t know how to locate the right buyer, they don’t have the technical resources and man power needed, so they can’t spend the necessary time to find the right buyer. That’s why regardless of their efforts and great skills they fail to sell your company and let you down.

A lot of “advisors” do not know how to locate every possible buyer around the world to find the best fit for your company, ideally the one that will pay the most, or they simply don’t have the resources to do it.

Due to this they are unable to find multiple buyers to start an auction, generating competition, which would drive your company price up and maximize its enterprise value.

Our experience in dealing with more than 1000 mandates has shown that 70% of the outcome of a business sale is based on an extraordinary amount of work on the buyer search, and contacting of the key decision makers. That is an intensive and heavy work load that can’t be done by a small team or a single advisor, the reality is that without a strong support system they will not be able to do it.

If this is your company and it is the most important operation of its history, You deserve an elite team working to maximize the transaction sale value.

If you want to sell your company, make sure that the advisor you choose can provide you with this level of search capabilities to find your buyer.

Written by Enrique Quemada, president of ONEtoONE Corporate Finance.

Beware of the shark´s kiss

Private equities have many techniques to get what they want. They are manufacturers: they manufacture money, buying cheap and selling expensive, so beware.

Don’t only negotiate with one private equity firm; prepare alternatives, whether they be private equity or other buyers and investors. If you only negotiate with one, you will lose your negotiating power.

The sale of a stake to private equity is usually a more complex process than selling to an industrial investor. Therefore, I strongly recommend that you don’t embark on negotiations alone; hire a professional advisor who is as prepared as your counterparty is.

Private equity firms will try to get exclusivity during negotiations; don’t grant it to them until you have a good letter of intent. This way you won’t lose negotiating strength while you try to agree on key points.

*1*When negotiating with a private equity firm, I recommend that the letter of intent be as binding and closed as possible.*2*

I try to negotiate all the key areas of the operation in this agreement so that the private equity firm has less room to maneuver after due diligence is finished.

I suggest you to do a due diligence and analyze the private equity firm you are negotiating with. A good way of doing this is to speak with other owners who have worked with the firm. Private equity firms usually put the companies they have invested in on the website.

They will be your partners and you will have to trust them when they become part of your company, but before then they are your opponents and you should be careful to protect your own interests.

Written by Enrique Quemada, President of ONEtoONE Corporate Finance.

Owner’s fatigue? Prepare to sell the company

More than a third of the business owners are 55 or older. For many of them it is time to prepare for sell.

One of the main objectives of the preparation process is to identify the key aspects that need to be improved and reduce any possible risks that a potential buyer might perceive to be a problem.

There are many businessmen who, at 55, decide they have enough money and “have done it all”, they no longer feel the urge to continue fighting and would rather focus on other pastimes, such as travel.

They may feel a social responsibility to dedicate the rest of your years to an NGO, maybe you want to buy a company focused on another activity, perhaps you want to devote yourself to politics or to your family (to enjoy spending time with your grandchildren in a way you couldn’t with your children because it coincided with the initial stages of your company). Having founded or inherited a company doesn’t mean you have to spend your whole life dedicated to it.

Others prefer not to retire until 70. In a highly competitive business world like today’s, without complete dedication from its owner, a company can rapidly deteriorate: the necessary amount is no longer invested, it loses competitive strength, and talented employees notice a lack of drive within the company and look for new work. It creates a vicious cycle that ends with the life, closure or bad sale of what were once magnificent organizations.

This situation is very common; the employer does not want anyone to know that he is willing to sell, which means he cannot completely explore the possibilities. It is also common that a business owner sees his competitors as the best candidates, but the idea of them knowing that he is selling makes him dizzy. He doesn’t know the techniques that exist in order to correctly manage confidentiality and he doesn’t know where to find other buyers.

As he doesn’t see a solution, the businessman gradually lets time pass by and it becomes increasingly difficult to sell.

If a businessman is 63 and wants to sell his company and retire in two years, it is always a good idea to start preparing the company for sale.

Any businessman thinking of selling his company should start preparing one or two years in advance

When you want to sell a house, you make improvements such as painting it, mowing the lawn, cleaning it and fixing anything that’s broken. These small touches can increase the value of the house in the eyes of the buyer because it changes its overall aspect. With a value much higher than a house, this advice rings even more true when it comes to your company.

If our client has time, we always begin to prepare his company one or two years in advance. This way, we have more time to improve its value, make it more attractive, interest more buyers, increase our chances of success, remove obstacles, and minimize the fiscal impact and economic consequences of the sale.

Don’t forget that by failing to prepare, you are preparing to fail.

Written by Enrique Quemada, president of ONEtoONE Corporate Finance.

When selling your business: surround yourself with the best

Selling a company is a much more complex process than any other sale, as a company is a living process and its sale affects third parties: Employees, clients, suppliers, banks, tax authorities, etc.

At the same time, it also implies legal responsibilities that may have important economic consequences for the different parties. For this reason, I recommend you to surround yourself with professional advisors.

During the sale of a large business, both the buyer and the seller always rely on professional advisors to help them through the process. Even though this should also be the case with smaller companies, we still see many business owners selling their businesses by themselves without looking for support from a specialized advisor.

When a buyer interested in the company arises, the business owner decides, in many cases to deal with this potential buyer himself, without the help of a professional expert. By doing this, the process can become extremely lengthy and the negotiations may get “tied up”. Who is going to know my company better than me? By this argument, the business owner justifies the reason behind managing the sale himself.

The buyer, on the other hand, uses advisors with a lot of experience both in the finance world and in negotiation and with a strong focus on the market. The seller is at a clear disadvantage because he does not possess this experience and this is reflected in the deal´s outcome.

Your advisors can provide imaginative solutions at times were the negotiation seems to be going nowhere. By providing financial solutions, they can use this to arrive at an optimum price for the company during the negotiation.

Good Advisors are expert negotiators when it comes to the buying and selling of businesses, they know how to frame the negotiation and are able to guide the client by advising him about what should be the convenient thing to say during the negotiation.

A good team of advisors stops the client from making many errors, increases the possibilities of selling the company and manages to attain a much higher price for the client´s business.

Selling a company is not an easy job, and it requires a lot of time. During the period of searching for investors and negotiations, you should focus your efforts on improving the company´s financial results while at the same time monitoring the advisors and demanding to be informed at any step.

Without advisors, it is very difficult to maintain confidentiality and, at the same time conduct a rigorous search to find the best buyer or investor for your business.

Surround yourself with the best. This process will be one of the “moments of truth” in your professional life. Don’t skimp on the quality of your advisors. As I have, I imagine that you too have also come to realize that “cheap is expensive”.

Written by Enrique Quemada, president of ONEtoONE Corporate Finance.