Some M&A impasses

Whenever we start a conversation about the sale of a company, comes the great dilemma that is, how much does the business worth? Is it the time?

There is usually an initial impetus on the part of sellers, betting on a non-standard value accepted by the market. We suggest, therefore, that the first step to be taken is the elaboration of Valuation, the name given to the calculations that determine the value of the company, taking into account several technical factors.

Applied to the correct methodology, which is accepted internationally, besides making some comparatives with multiples, shareholders are sure of how much the business is worth. At this moment, with the exact value determined by the calculation, is initiated there is discussion if it is the time of the sale.

In addition to market analysis, the company may not be ready to go to the market. It may not have good numbers, many contingencies, problems with products, weak commercial, no accounting and financial controls, etc. etc. etc. Also in many cases, the value determined by the calculations is not attractive to shareholders.

Two other points that are always the focus of our analysis, and quite interesting: There are companies whose sizes are small to be bought by large corporations and large for smaller buyers. The second factor can happen negatively, when the sector in which the business is inserted, is in crisis, therefore out of the focus of the buyer market. In these cases, the sale may take longer than normal or may not happen.

When all of the items described here, and with the understanding of the vendors, the M&E process itself can be started, or closed, awaiting a more timely moment.

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