Generational change as a driver of M&A transactions
The Spanish business fabric is facing an unprecedented challenge which will play out in the coming years: the inevitable passage of time. Businessmen from the baby boom generation, who laid the foundations of the current economy, are approaching retirement, leaving a question in the air: What will happen to small and medium enterprises lacking a natural successor?
A look at the international landscape
We pick Japan as a point of comparison, since its demography and business environment is similar, in certain respects, to Spain´s, and can offer valuable lessons. During the last decade, M&A transactions have increased considerably. Although cultural and economic factors are important, the generational gap is playing a key role here.
Spain has distinguishing characteristics, however, which set us apart. Although 1.1 million SME´s are facing the challenge of generational replacement, our socioeconomic context and family dynamics present unique challenges and opportunities.
Spain in the European context
While Spain and Japan share a number of similarities, if we compare Spain´s business fabric with that of other countries, we can see a trend towards corporate consolidation. For example, Germany, with its Mittelstand system of medium enterprises, has adopted merger and acquisition strategies to strengthen its capacities and presence in the international markets. In France, conglomerates are becoming the norm, especially in technologically-advanced sectors. This comparative perspective underlines the urgency with which Spanish SME´s must act to stay competitive in the European market.
Combination of innovation and competitiveness in a globalised world
In the digital era, mergers and acquisitions go beyond a simple increase in size. They become open doors towards the integration of advanced technological capacities, the digitalisation of operations and access to new segments in the market. According to a PwC report, 60% of mergers in Europe focused on acquiring such technological capabilities. In addition, a report by the Bank of Spain found that Spanish SME´s are, on average, 40% smaller than their European peers. For SME´s, this disparity underlines the importance of increasing in size to stay competitive in an international landscape.
Mergers and acquisitions are not merely a way to increase in size- they also act as evolution strategies, allowing companies to adapt. Synergies generated through M&A deals also bring access to resources, technologies and markets which were previously out of reach.
Mentality changes and corporate future
The stigma associated with the sale of a company is disappearing. New generations see these deals not as an end, but a step in the evolution of the corporate journey. This proactive and open attitude is essential in the current globalised economy.
However, it´s not just about adapting to circumstances. M&A transactions must be approached as a strategic tool and not just an exit when faced with a lack of generational replacement.
Opportunities in the face of adversity
The clock is ticking, and so are the challenges arising from generational change. This scenario brings, nevertheless, unparalleled opportunities to rethink, restructure and revitalise the Spanish corporate world.
With the right advice and a strategic vision, Spanish SME´s can raise up to the challenge of generational replacement, and also position themselves strongly in the global landscape. The key is being able to anticipate and adapt and, especially, having the courage to face the future with determination. The key is to have the right allies. Allies such as Confianz.