Mergers and acquisitions
Mergers and acquisitions in Panama
For most owners, selling or buying a company is something they do once in a lifetime. On the other side of the table there is almost always someone who has done it many times.
DB Consultants Group advises on company sales and acquisitions in Panama: preparing the information package, supporting the valuation, approaching counterparties and staying through to closing.
The starting point
Selling well is not the same as finding a buyer
A company sells badly for three reasons, and none of them is the asking price. It sells badly because it reaches the market unprepared, because the owner cannot support his own figure, or because he negotiates with a single interested party.
An adviser’s job is not to produce a buyer — with a profitable company, buyers tend to appear. It is to reach that conversation with the information in order, the value supported, and more than one alternative on the table.
Sell-side mandate
How a sale is prepared and run
- Diagnosis and preparationFinancial information, corporate structure, contracts and contingencies are reviewed. What the buyer would later find in due diligence surfaces here, with the difference that there is still time to fix it or explain it.
- ValuationThe value range is set with a documented methodology and scenarios. It is the number you go to market with and the one you have to defend afterwards. How a valuation is prepared.
- Information packageA one-page anonymous teaser for first contact, and an information memorandum with the detail, released only against a signed confidentiality agreement.
- Approaching counterpartiesA short list of likely buyers is built — strategic players in the sector, groups with complementary businesses, financial investors — and approached in an orderly way, not one after another.
- Offers and letter of intentProposals are compared on more than price: payment structure, timing, conditions precedent, the owner’s continued involvement, warranties and holdbacks. Two offers at the same headline number can be worth very different amounts.
- Due diligenceThe data room is coordinated, buyer requests are answered, and findings are managed — they almost always translate into price adjustments or warranties.
- ClosingThe firm supports the contract negotiation alongside the company’s lawyers, through signing and payment.
An orderly sale process takes six to twelve months from mandate to closing. Those that close faster usually had a buyer before they started; those that take longer usually stalled in due diligence.
Buy side
Buying a company
The firm also works for the buyer. The engagement changes shape but not substance: knowing what you are paying for and what you are inheriting.
- Search and screening. Defining the target profile and filtering candidates by size, sector, financial condition and genuine willingness to sell.
- Independent valuation. A price of your own, built on the buyer’s assumptions rather than the seller’s.
- Financial due diligence. Quality of earnings, normalized working capital, real debt and contingencies.
- Deal structure. Share purchase or asset purchase, cash or deferred payment, earn-outs, warranties and holdbacks.
- Financing. Structuring and presenting the transaction to banks when part of the price is leveraged.
- First hundred days. What has to be ready before signing, not after.
Due diligence
What gets examined before signing
Quality of earnings
How much of the result is recurring and how much is one-off. Personal expenses, non-recurring income and items that will not repeat under new ownership are stripped out.
Working capital
The normal level the business needs to operate. It is the discussion that most often moves the price in the final stretch, and the one least anticipated.
Debt and commitments
Financial debt, leases, guarantees granted, accrued employee benefits and any obligation that survives the change of control.
Concentration and contracts
How much revenue depends on a few clients, which contracts carry change-of-control clauses, and what happens to them the day after signing.
Pitfalls
What costs a seller the most
- Negotiating with a single party. With no alternative, the counterparty sets the price. Competition between two candidates is worth more than any argument.
- Showing the company without a confidentiality agreement. A competitor may be buying information rather than a business.
- Disorganized accounting. Every due diligence finding becomes a discount, and late-stage discounts are accepted with less room to push back.
- Confusing price with proceeds. Holdbacks, earn-outs and warranties can leave a headline number that takes years to arrive in full.
- Not preparing the owner’s exit. If the business depends on one person, the buyer discounts it or locks that person in.
Transactions the firm has taken part in are summarized, where the client has authorized it, under recent transactions. Every engagement is confidential.
Common questions
Frequently asked questions
How long does it take to sell a company in Panama?
Six to twelve months from mandate to closing when the process is properly prepared. The stage that stretches most is due diligence, and it shortens by preparing in advance the information the buyer will ask for.
Can a company be sold without staff or competitors finding out?
Yes. First contact is made with an anonymous teaser that does not identify the company, and the detail is released only against a signed confidentiality agreement. Discretion is part of the engagement.
Does the company need to be valued before going to market?
Yes. Going to market without your own supported figure leaves the conversation in the buyer’s hands. The valuation is the first step of a sale mandate.
What is the difference between a share sale and an asset sale?
In a share sale the buyer acquires the company with everything it carries, contingencies included. In an asset sale the buyer chooses what to take. Price, risk and tax treatment all change, which is why it is decided before negotiating.
Does the firm find the buyer?
Yes. A short list of candidates is built — strategic players, groups with complementary businesses and financial investors — and approached in an orderly way so that more than one alternative exists.
Do you advise foreign buyers acquiring in Panama?
Yes. The firm works for buyers as well as sellers, in English or Spanish, and coordinates with the client’s legal counsel on the local documentation.
Do you work with the company’s lawyers?
Yes. The firm handles the financial side and the conduct of the process; the legal documentation is led by the client’s counsel, working in parallel through to closing.
Let us talk about your company
If you are considering selling, buying or bringing in a partner, a first conversation helps set the starting point. It is confidential and commits you to nothing.