April 30, 2014

Business Intermediation represents buyers and sellers of small, medium and large companies who personally accompany and provide advice throughout the process of acquiring and selling. Knowledge of what the motivations of both parties are is of enormous value to protect and promote their interests.

Due to the positive macroeconomic environment and thanks to the increase in national and international investments that Panama has been enjoying in the last years, it has now become possible for an area of business that had gone by substantially unnoticed to attract the interest and trust of an ever increasing number of Panamanian businessmen.

The principal objective of a business intermediation service is to inform the clients of the cost/benefits of the business opportunities in order for them to make the best decisions, listening to and understanding what the financial goals are, and the purpose of designing and carrying out corporate operations that permit maximizing the values for the clients.

Innovative strategies are created and personalized to meet each client’s needs, keeping in mind the risk profiles and the conditions of each market, promoting them nationally and internationally. A balance is sought between “ideal business” (low risk and high earnings) and “risky business” (low cost but with a high probability of going bankrupt) becoming a business that is already established but with an opportunity for growth.

Selling a business is an important decision to make from a financial, fiscal, organized and personal point of view since the transfer may be accompanied by emotions. Selling a business to the right buyer is a rigorous task that requires persistence as well as being professional and dedicated.

The negotiating position of the seller is also strengthened by record earnings because the investor realizes that the owner has the option of keeping his company. The most obvious buyers are other companies that are in similar areas of business which makes expansion logical with potential increases in earnings.

Businesses are sold for various reasons, not only because they are in serious situations as could be assumed at first glance. Some examples are: retirement, saturation/change of business sector, change of lifestyle, problems between partners, growth in other markets (such as franchises), need for capital, change of residence, lack of time dedicated to the business, problems with family/health/lack of heirs, the need to adapt to the competitive market and growth.

The sales process of a business at the best price requires preparation, analysis and potential scenarios among others. There is no set time for this. Otherwise, a sale may be made that does not fulfill the initial expectations of the seller. Some of the factors that could affect the process needed to sell the business are the selling price and the flexibility at the moment of negotiating its value considering the conditions that it is in.

Confidentiality is critical at any stage of the sales process of a company for its welfare and to maintain good work relations among all involved.

The valuation of the company is used to determine the price that they are willing to pay or receive in order to close a business transaction. Therefore, it is fundamental that it be precise and trustworthy. Its purpose is to provide transparency on the value of the business and on which factors affect it the most. For that purpose, various methods can be used that are internationally accepted that meet the characteristics of each company.

For the partner, the value of his company is defined by its assets and the earnings it is capable of generating. For the buyer, a company is worth what someone is willing to pay for. While the seller is valuating his company with the goods and success achieved by his management, the buyer expects to obtain the best returns and is thinking of the changes that must be made: making new investments, new management policies, etc.

To know why it is so important to do a valuation, it must be understood that the accounting value reflected on the company’s books usually differ from the real market value. Each method has its advantages and inconveniences, and efforts are made to choose the method of valuation that best adapts to the circumstances.

Others News