"Learnings, challenges, and opportunities in the processes of buying and selling companies."

It's becoming increasingly common to read or hear about sales processes or mergers of companies. These are highly complex processes requiring the parties involved to have the necessary information to make the right decisions throughout the process. Guyer & Regules organised, for the second time, a specialised event aimed at thoroughly analysing "Learnings, challenges, and opportunities in the processes of buying and selling companies."

Expert professionals and distinguished guests with experience in M&A processes (Carlos Acle from CUTI, Agustín Fernández from Frigorífico Modelo, and Alfredo Irigoin from Linzor Capital) shared examples and insights of interest for the proper development of these processes.

The event was structured with presentations and panels addressing the evolution of the mergers and acquisitions market in Uruguay in recent years, current trends in international and national valuations, the phases typically involved in these processes, necessary documents, the preparation of offers, and price-setting in a transaction.

Federico Stanham, consultant and expert in M&A transactions, opened the seminar by analysing market behaviour, stating that 2024 is expected to be a year of "recovery and growth" in the number of transactions. He also explained that, in Uruguay, according to available information, two-thirds of operations correspond to the IT, commerce and services, and financial services sectors. He added that the way these operations are carried out has changed in recent years.

Moreover, a panel formed by Guyer & Regules partners, Guzmán Rodríguez (moderator), Florencia Castagnola, and Javier Berdaguer, discussed the structuring of M&A processes.

Castagnola emphasised the importance of achieving a better understanding of each party’s objectives for a better structuring of the process. She noted that "in Uruguay, share purchases are still executed in a traditional way, but this is not the only thing we are seeing in the market." She also added that it is increasingly important to properly assess the scope of the operation, based on the need for prior authorizations from the Antitrust Commission.

Berdaguer, on the other hand, particularly emphasised the importance of sellers being specifically prepared for these types of transactions to avoid common mistakes, highlighting the relevance of the "term-sheet" to align expectations in the process.

Rodríguez summarised, stressing that leadership is fundamental for the successful development of these types of operations.

In the second discussion panel, Nicolás Piaggio, co-chair of Guyer & Regules, referred to "earnouts," i.e., contingent payments agreed to the seller in the process, based on the fulfilment of certain objectives during such process, particularly associated with technology company sales. "These are agreements that allow capturing the will of both parties. The seller believes that their company has potential and wants to capture something in the price when it materialises, and the buyer does not want to pay for something that is not certain to happen."

Finally, in the final section, the guests commented on their experience as participants in company sales. Alfredo Irigoin, from Linzor Capital, commented on key factors his firm typically analyses as a private equity fund to decide on the purchase of a company. "The first thing we look at is the team, then doing things right and having systems because system dependency is strategic, and finally the general environment, such as the country context and growth prospects."

Agustín Fernández recounted his experience in the process of selling part of Frigorífico Modelo's business, stating that prudence and proper planning are essential to complete the transaction. "Being ordered was key in the operation," he commented.