Tag Archives: mergers & aquisitions

Mergers & Acquisitions, Compraventa de empresas

70% of the value of a company lies in finding the suitable buyer

Many business owners will sell to the first buyer without taking into account other potential buyers. When selling your business it is important to ask questions specific questions. Is this the best buyer? Is he the one that can pay the most for the business?
Business owners often rely on a lawyer or an auditor to look for potential buyers and investors without considering 70% of the deal value lies in finding the suitable buyer. Hence, it is essential to find a buyer which is the best strategic fit and will pay the most.
To maximize the value of your company, you or the advisors must engage in a rigorous search process to find buyers or investors who can deliver the highest synergies for your business and those with the strongest financial profile.
The best buyer is not always the most obvious buyer or the closest one. The best counterparty for your company could be for example from a different sector located on the other side of the world.
Once, in ONEtoONE Corporate Finance we advised during the sale of a company that generated ten million euros each year, the company had two million euros in operating income (EBITDA) and six million in financial debt. We found a buyer in the same country (Spain) who´s company earned double of what this other company earned, but had accumulated a lot of debt. He was interested in buying the company, offering to buy it for six times the operative income, which meant that discounting the company´s debt; the potential buyer was willing to pay six million euros for the selling company. As the potential buyer did not have enough capital up front to pay for the company, he offered to pay two million at the time of the sale and the rest of the four million over the upcoming years.

We found a German buyer with a turnover of double the selling´s company, but contrary to the Spanish buyer, he did have financial capability. Given that it was an international operation and the German company did not have a presence in Spain, he offered to pay a higher price for the company. He offered to pay seven times the operating income, (that after subtracting debt, it valued the company at eight million euros) and also planned to pay for the company in deferred payments, paying six million at the start and the rest of the two million one each year.

We attracted a third buyer, a Canadian company with a turnover of more than a billion euros, from which he earned a total of hundred million and with no debt. He saw many synergies with our client and he did not have any presence in Europe. He had a lot of interest in the company and offered to pay ten times the operating income of the company that after subtracting the debt, it left the buying price set at fourteen million.

If we were to have sold it to the Spanish firm, the firm could have come up with excuses not to repay the remaining four million euros and could have paid for the company two million. The Canadian company paid seven times more.

For your company, you should look for a buyer that gives you synergies and has a lot of cash at hand, without minding so much about its location. If the buyer can perceive the true added value for the company, they will be willing to pay more for your business.

Cómo encontrar al mejor comprador_EN_ DEFINITIVA

Written by Enrique Quemada, president of ONEtoONE Corporate Finance.

Mergers & Acquisitions, Compraventa de empresas

Investors look to Latin American

This year the Latin American market ignited the interest of several foreign companies, which find good growth opportunities in these countries. In November, this tendency continued, the amount of cross-border deals registered had a significant impact in the total number of deals. US-based acquirers continue to be the most active in Latin America, with 17 acquisitions registered.

US-based Cabot Internationals acquired a 59.95% stake in Negro Humo (NHumo), a Mexico-based chemical company, held by Grupo Kuo. The deal value was USD 105m. Furthermore, General Electric Company acquired IDT – Ingeniería y Desarrollo Tecnológico, a Chile-based consultancy and engineering company, held by Chile-based Grupo CGE. Highlights, in Brazil, include US-based One Equity Partners’ acquisition of a stake in Brazil-based Unicoba, through a capital increase of approximately USD 65.93m.

On the other hand, Latin American companies started to invest abroad through internationalization strategies. One of the most active countries was Colombia with eight acquisitions registered, followed by Mexico with six. Highlights, in Colombia, include Cementos Argos’ acquisition of a 53.3% stake in Lafarge Honduras, held by French cement company Lafarge, for EUR 232m.

The Latin American transactional activity dropped slightly in November, both in number of deals and investment volume compared with the previous month, according to data from Transactional Track Record. However, the number of deals announced was noteworthy, which implies that the market is dynamic. These transactions should be complete within the next few months.

Brazil-based companies continue to be the most active with 61 deals registered, followed by Mexico with approximately 19, and Colombia with 18. Among the largest deals was the acquisition agreement made by China-based CNPC – China National Petroleum Corporation of Petrobras Perú, held by Brazil-based Petrobras. The deal value was USD 2.60bn. Furthermore, still in Brazil, consortium Aerobrasil, constituted by Switzerland-based Flughafen Zürich, Germany-based Flughafen München, and Brazil-based CCR, acquired a 51% stake in Concessão Aeroporto Internacional de Confins, held by INFRAERO. The deal value was USD 612.11m. INFRAERO also reached an agreement to sell a 51% stake in Concessão Aeroporto Internacional Galeão to Consórcio Aeroportos do Futuro, for USD 8.32bn.