With more than 50 years of joint experience
ZIMMA offers extensive experience advising clients on their decision making process when the sale of their company or a division, whose annual sales exceed US$10MM. The reasons for said transaction can be strategic, professional or personal, and for which we offer unbiased advice.
Every transaction begins with a thorough valuation of the company, since it’s impossible to sell something if its value is unknown. Hence, the best way to maximize a company’s value is through an expert that:
- Creates competition
- Coordinates an structured process
- Designs an attractive financial structure for both parties
- Negotiates with objectivity and with in-depth knowledge of the company
There are many reasons why transactions do not close. Some of the more common are:
- Seller’s expectative is not aligned with the market value of the business on sale
- Misaligned expectations between the buyer and the seller that stem from miscommunications on the potential benefits of the transaction
- Inadequate valuation of the company’s future projects
- “Findings” during the Due Diligence process that generate uncertainty
- Wide range of opinion regarding the company’s value amongst the shareholders
- Lack of process follow-up – since the transaction is a long process and is outside of the regular course of business operation
- Extreme situations that come about in a long and unmanaged process due to external factors such as macroeconomic forces, political crises, etc.
Stages of the process
1. Understanding of the Company and the Market: ZIMMA carries on a deep analysis of the Company. We analyze the Company’s assets and liabilities, its operations, distribution channels, clients, technology and future strategies. A thorough understanding of the market is obtained, revising costs, profit margins, direct and indirect competition, barriers of entry and market trends. This first stage of the project makes up the basis of a successful execution, and this is why ZIMMA emphasizes on this analysis in order to provide the best advice throughout the transaction. In depth knowledge of the Company allows the team to mitigate any potential weakness and adequately position the Company to potential investors.
2. Financial Valuation and Capital Structure:ZIMMA develops financial models and analyzes the Company’s financial structure in order to obtain the Company’s real value and be able to engage in a negotiation for the Company. ZIMMA uses international valuations models such as discounted cash flows of future projects, multiples of precedent transactions and trading multiples of companies in the sector. A correct valuation allows ZIMMA to better negotiate assumptions with interested parties and maximize the value of our client.
3. Descriptive Materials: ZIMMA designs several presentations and informative materials to present the Company to potential investors. Examples of these documents are: executive summary, management presentation and investment proposal. We build these documents to provide a solid comprehension of the business to investors. A detailed and well-crafted communication of the Company allows the firm to build market appetite.
4. Search for Potential Investors: ZIMMA, through its M&A International network of +500 professionals in more than 40 countries, paired with its knowledge on the investment banking sector in Mexico reaches out to companies and financial institutions that could be interested in investing in the company. ZIMMA generates competition among local and international investors in order to maximize the transaction value.
5. Investor Presentation: ZIMMA, in collaboration with the Company, presents the designed material to potential investors and institutions where questions about the nature of the business are answered as a team. ZIMMA coordinates questions and answers with potential investors to anticipate and mitigate any doubts about the transaction.
6. Negotiation / Due Diligence: Once there is a non-binding offer from one or more investors, ZIMMA works closely with the client so that the due diligence is orderly executed and that negotiations and legal contracts work in favor of our client. ZIMMA has advised more than 60 transactions, knows the negotiation process very well and will work to get the best terms and conditions for the client.
7. Transaction Close: ZIMMA will assist the Company and the legal, tax and accounting advising team in the elaboration of the closing documentation. ZIMMA will coordinate the legal firms and help maintain a defined timeline in order to successfully close the transaction in time.
Timing of a transaction
Process of Selling a Company
Merges and Acquisitions
1. How is a Company or Business valued?
We invite you to read our article on Company Valuation
2. How is the selling process started?
3. How do I contact potential investors or companies that could be interested?
4. How do I structure the transaction?
5. Which alternatives do I have for succession at my Company?
We invite you to read our article on Succession Alternatives
6. How could I negotiate the best terms and conditions?
7. When is the best time to sell my Company? Is now the right to sell my Business?
We invite you to read our article on When to sell my Company
8. What happens if my competition or my employees found out I’m in a selling process?
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