Options

Preliminary Meeting

Potential acquirers should contact Redirection M&A for a preliminary and confidential meeting, without any commitement, during which their acquisition criteria would be discussed.

If we are already acting on behalf of a Spanish company for sale coinciding with a potential buyer’s acquisition criteria, we would obviously present it as a potential Target.

However, if we are not representing a Spanish company for sale coinciding with the buyer’s acquisition criteria, then we can offer several options:

Passive Approach

Most good profitable companies are usually not for sale. Therefore, if one goes about acquisitions in a purely opportunistic fashion (by simply waiting for companies to come on the market), a lot of very good potential Targets, not actively for sale, but which could be acquired, are overlooked.

If one passively waits for companies to become “For Sale”, they are usually not financially attractive; or if they are, then this normally means that the owners have almost certainly engaged professional advisors and that other possible buyers are also looking at the same Target. This implies a competitive Dutch Auction Situation and almost always, higher prices.

Auction Situation

Companies actively for sale

are being looked at by other buyers.

That implies a competitive situation

with higher prices.

In fact, locating and acquiring a good company is very similar to recruiting a top-level executive. The best ones are usually already happily employed; they seldom read  press ads; and must be actively located and “seduced” to leave their existing employment.

As can be expected, success with a passive approach is very unpredictable. Luck plays a very important role since one must wait until a Target  matching his acquisition criteria comes on the market, and this very rarely occurs in practice.

Active Approach

In an Active Approach, we undertake a very comprehensive and systematic search of the Spanish market, by contacting and screening all potential Targets according to our client’s acquisition criteria. We then entice the attractive ones to the negotiating table, even if they have never seriously considered selling before.

By taking this initiative, the client almost always finds himself in a Sole-Bidder Situation and the Hit Rate with this approach is extremely high. As a by-product, the buyer also obtains a wealth of general Spanish market intelligence.

Sole Bidder Situation

Most good profitable companies

are usually not for sale.

They must be seduced to the negotiating table,

Thereby creating a Sole Bidder Situation.

Wait and Let the Seller Pay

Potential buyers sometimes ask why they should contract our services. That is, why don’t we merely sign a Sell Mandate with the vendor, and collect our professional fees from him?

Apart from the reasons already detailed, even if we do have a Sell Mandate, in the final analysis our fees are going to be paid by the funds that the seller eventually receives from the buyer.

Therefore, as long as the buyer is, in effect, paying our fees, it makes more sense to act on his behalf and negotiate the best deal for him. An agreement with the seller obligates us to keep his best interests in mind and not those from the buyer.

Furthermore, given our long experience in Spanish M & A, if we do work for the buyer, our involvement usually ensures a significantly lower purchase price than the buyer could ever negotiate on his own. Our Success Fee is normally only a  small fraction of the price differential that we can negotiate for the buyer.

Finally, informing sellers that the buyer is paying our fees always attracts many more potential Targets to the negotiating table.