Is it time to sell your business? PIB points out where the opportunities are

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A positive economic scenario and solid results are factors that need to be present in a company’s sales planning.

Two factors are essential to assess whether your company is ready to be sold with the best possible result. The first is internal financial health, with an emphasis on a solid track record of profitability. The second is the impact of the economic situation on the sector in which it operates.

“Just as an unprofitable company has little value in a good economy, a company with historically strong profits will not reach its highest value if it is sold when the economy is down or stagnant”, teaches executive John D. Wagner, in his “Fundamentals of Mergers and Acquisitions for People in a Hurry”.

The result of the GDP (Gross Domestic Product) in the third quarter of this year in Brazil grew by 0.4% compared to the index of the previous three months, according to the IBGE. It was the fifth consecutive positive result, consolidating a wave of optimism and, at the very least, stability, since the latest data shows a slowdown in growth compared to the second quarter of this year.

Between July and September 2022, the Brazilian GDP was mainly driven by the services sector, which grew by 1.1%, followed by industry, which grew by 0.8%. Services in the country group a huge amount of activities and account for 70% of the economy. The highlights among them were information and communication, with a rise of 3.6%, financial activities, insurance and relational services, with 1.5% and real estate activities, 1.4%.

This means that companies that operate in these segments and have achieved good levels of development and profitability are in a privileged position to include the possibility of putting themselves up for sale in their planning. It is not difficult to identify in this position the technology companies and Brazilian startups that remain strong and bring innovation to traditional markets.

Wagner in his book even warns of the dangers of not taking advantage of the right time. He says, “If you work in a cyclical industry (as most of us are) and the timing is good now, you might ask yourself: Am I prepared to wait out the next downturn, which could easily be a four-to-five cycle? six years? Or should I sell now, knowing that the sale process will take about six months to a year to complete?”.

For many entrepreneurs, advice can cause reluctance, since the sales process is delicate and a mistake, or badly finalized negotiation, can jeopardize the work of years, or even a lifetime. Therefore, the importance of hiring a company specialized in M&A (Mergers & Acquisitions, or Mergers and Acquisitions, in Portuguese) to point out the best paths.

“With a solid economic environment at its peak, or even near its peak – on the rise, not the other way around! – now is the ideal time to hire a mergers and acquisitions advisory team to help prepare your company and put it in the market to see what ratings you can get,” advises the author.

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