Confianz

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  • How to manage the impact of a company sale

    Managing the impact of the sale of a company is a surgical operation that touches sensitive nerves: people, culture, customers, processes. Selling is a milestone, but it is also a shock that, if not handled well, can be expensive for the buyer, the seller and the whole team in between. For the buyer, the seller and the whole team in between. The secret? Planning, empathy and a clear vision of what comes after closing.

    What changes when a company is sold

    All of it. Or almost everything. Selling impacts everything from the internal structure to how customers perceive the brand. One of the first effects is uncertainty in the team: Do I stay? Do they change me? What do they want from me now? These are not minor questions. If they are not answered well, productivity plummets. Added to this is the redesign of processes. What worked before no longer fits. New tools are coming, other KPIs, another management style.

    In parallel, business strategy often mutates. New priorities. Changes in the value proposition. Sometimes, restructuring of products or services. This generates noise among customers, who may become suspicious. Statistics confirm that companies that do not manage this transition well lose brand loyalty and market share. And if the buyer is international, we add the challenge of integrating completely different cultures, systems and ways of working. The intangible becomes the biggest risk.

    Practical keys to managing the impact of a company sale

    The first thing is to stop thinking that this can be solved with a communiqué. Communicate yes, but with a plan. Internally, transparency is not optional. The team needs to understand why it is being sold, what is going to happen and how it affects them. And this is communicated from the top, but also from each line manager. Communication cannot be vertical and static. It must be adapted to the channel and the context of each area.

    Second: processes. Standardisation does not sound glamorous, but it is vital. A sale brings administrative chaos. If processes are not clear, errors multiply. A good CRM system and collaborative tools make the difference between surviving or stagnating in integration. It’s not just about technology, it’s about method.

    Third: customers and suppliers. Talk to them before the market does. Tell them what is changing (and what is not). Listen to doubts. Give signs of continuity. One fact: customer-centric companies are 38% more likely to increase their profitability after restructuring. It’s not marketing, it’s operational reality.

    Fourth: data. In a transition, emotions rule. But decisions must come from numbers. What metrics? Revenue, customer retention, satisfaction, lead conversion, churn, team productivity. Measuring allows you to adjust and anticipate risks. You can’t improve what you don’t measure.

    And the point that many forget: talent. Selling generates a silent drain. Key people leave out of fear or lack of information. Retaining talent is not just a question of salary. It is about explaining their future role, offering stability, training in new processes. And above all, listening. Change management is about accompanying, not imposing.

    And after the closure? That’s where it all starts

    Once the sale is signed, the hard part begins. The urgent part is over. Now comes the important part: getting the company up and running in the new phase. This is where you can see whether the transition was well managed or not. Often, the focus is on closing quickly, not on integrating well. And then come the problems: falling sales, customers leaving, internal blockages.

    The key is to remain vigilant. Follow the integration plan. Measure weekly. Have real feedback meetings, not ceremonial ones. Correct quickly. And, above all, don’t lose sight of what makes the company unique: its culture, its way of doing things. Selling can be an opportunity for growth, but only if the foundations of the business are respected.

    Confianz has accompanied sales processes of all kinds. Large, small, between family groups, between funds. Contact us if you would like our experts to study your case and advise you during this process.

  • Labour reform 2025 in Spain

    The 2025 labour reform in Spain is already on the table. And although not everything has been finalised, some things are clear: the working week is changing, working hours are being tightened and the use of temporary contracts is being restricted. For companies, this means reorganising, reviewing contracts and adapting.  Now it is time to update processes and ways of working. Let’s get down to business.

    37,5 hours per week

    The standard working week will be reduced from 40 to 37.5 hours per week. This will be implemented progressively until December 2025, with no reduction in pay. In other words, less time is worked for the same pay.

    For many companies, this means reorganising shifts and functions. If you have multiple teams or a continuous operation, it may be necessary to rework schedules. If you have staff on the minimum wage, the cost per hour goes up. The new SMI is €1,184 per month in 14 payments, which means almost €10 per hour. This needs to be taken into account when budgeting, especially if you have a lot of staff in that wage bracket.

    It is not an insurmountable measure, but it does require planning. It is not enough to cut two hours and leave everything the same. The important thing is to take a good look at how it affects day-to-day life.

    Mandatory digital time control

    Time recording will be compulsory and digital. No manual clocking-in or home-made systems. The Labour Inspectorate will require that clock-in, clock-out and break times are documented in a system that can be easily audited. Failure to comply can cost up to €10,000 per worker.

    Beyond the fine, the real risk is in claims. If an employee asks to review their overtime and there is no reliable record, it will be difficult to defend themselves. And this does not only affect large companies. Small businesses, shops, workshops… all will have to adapt.

    It is advisable to implement a system that fits the size and type of activity of the company. At Confianz we have helped companies to do this in a simple way, without major costs or technical complications.

    Fewer temporary contracts

    One of the main objectives of this reform is to reduce temporary work. The use of temporary contracts will be further limited, requiring clear and concrete justification. The aim is to make permanent contracts the norm, not the exception.

    In addition, the protection of permanent-discontinuous workers is strengthened. The 1.5 coefficient will once again be applied to their contributions, which improves their access to benefits such as unemployment benefits. For companies, this may entail a small increase in social costs, but above all it forces them to review whether this figure is being used appropriately.

    This will affect sectors with high seasonality or high turnover. But even in more stable companies, it is worth reviewing recruitment policies. What was once taken for granted may now be subject to sanctions.

    Right to disconnection and work organisation

    Another point that is starting to gain more weight is the right to disconnect outside working hours. It is not forbidden to write a WhatsApp at 8pm, but it is frowned upon if it is a regular occurrence. Companies will have to reinforce their internal protocols and put in writing when and how staff can be contacted outside working hours.

    Moreover, this intersects with changes in working hours and time control. If you reduce the hours, if you control the times more, you also have to rethink the communication channels and the way you coordinate teams.

    This does not always require big changes, but it does require some consistency. You can’t ask for efficiency with fewer hours if you don’t provide the tools to organise the work better.

    The 2025 labour reform in Spain brings important but acceptable changes. Shorter working hours, more control, more stable contracts. It is not necessary to reinvent the company, but it is necessary to stop and think about how it affects each area. In many cases, it is a matter of adjusting processes and anticipating what is coming.

    If you want to review how the reform affects your team or just be prepared, let’s talk.

  • Why everyone is talking about earn-outs and locked box in M&A

    The key phrase «earn-outs and locked box in M&A» is no longer exclusive to law firms or reports gathering dust in drawers. Today, if you are in the middle of a transaction – or close to it – you are likely to have heard these terms. What was once a rarity is now almost the norm. But do we really know how they work, or do we just go with the flow for fear of being left out? Here’s an explanation that doesn’t require a PhD or infinite patience.

    What is behind earn-outs and locked box in M&A?

    CMS’s latest European study on M&A transactions provides the keys: more money is moving, there is investor appetite, and formulas are being sought to better spread the risks. The result? Two structures are leading the conversation: earn-outs and the locked box system.

    Let’s start with the earn-out. It is simple, but powerful. Its usefulness lies in the fact that it helps to bridge one of the most tense discussions in any transaction: how much what is being sold is really worth. Often the seller believes that his company is worth more than what the buyer is willing to pay. And the buyer, quite rightly, does not want to make promises without proof. The earn-out puts a solution in the middle: «I’ll pay you a part now and, if the company performs as you say it will, I’ll pay you the rest later».

    From the buyer’s point of view, moreover, the earn-out acts as a safety net. This is especially useful when there is information asymmetry. For example, if the business is in another country, has never published its figures, or has many intangible assets that are difficult to value. If the future of the company is uncertain, this model allows the price to be adjusted to concrete results, not promises.

    Another detail that often goes unnoticed? In many operations, the earn-out achieves something key: retaining the team. If there are key managers or founders in the equation, this model gives them real incentives to stay involved and ensure that the company meets the agreed objectives. There is no better way to align interests than to make the seller have to prove that their valuation was not smoke and mirrors.

    It is no coincidence that this model is growing so much in sectors such as technology, healthcare and media. According to CMS, by 2024 it was already present in 25% of operations. Its highest level in the last decade.

    Then there is the  locked box, which also has its own thing. It looks like a safe, but it is actually a structure that fixes the price of the transaction from a specific date. «This was worth the business on 31 January, and that’s the price. No adjustments, no surprises. Sure, it requires trust, solid data and very clear prior agreements. But once closed, the discussion is over. And that is priceless in a negotiation.

    This system has gained momentum especially in Infrastructure, Energy and Real Estate. According to CMS, it is already used in 60% of transactions without price adjustments. Why? Because it avoids surprises.

    The balance of power 

    For years, many M&A deals were a tug-of-war where the seller had the upper hand. Today, the buyer comes in stronger. We see this in details such as liability periods, which are getting longer and longer, and the rise of W&I insurance. In other words, if something goes wrong, it is covered by insurance. In 2024, they were present in one out of every four operations. In the large ones, in almost three out of four.

    The curious thing is that even when there is arbitration (which is becoming increasingly common), 70% of cases are still governed by national rules. Why is that? Perhaps because relying on what you know still outweighs taking the plunge into the unknown, no matter how international it may sound.

    It is not all clauses and technicalities. Artificial intelligence is starting to creep in, but slowly. Thirty-two per cent of the tools used in M&A already incorporate it, but it is not yet in charge. And ESG criteria – the ones that everyone mentions on LinkedIn – are rarely mentioned: only 6% of contracts include them. Just enough to say that they are there, but far from being a priority.

    Are you considering an operation? Contact us to talk to our experts.

  • How TEAC rulings in 2024 affect your holding company

    The TEAC rulings in 2024 on holding companies have shattered the peace of mind of many firms. Have you restructured your group in recent years? This affects you. It doesn’t matter if the operation was clean, with economic motives and serious advice. It doesn’t matter if you had a binding report from the DGT. Because now the Inspectorate is re-reading the FEAC regime with a magnifying glass and changing criteria. And yes, we are talking about direct tax consequences. There is no room for mistakes here. Nor is there room for complacency. We tell you what is happening. And how to prepare.

    TEAC changes

    They didn’t say it in those words. But that is what is happening. The TEAC rulings in 2024 on holding companies introduce a twist: it is no longer enough to formally comply with the requirements of the special tax regime. Now substance is required. Business justification. Translated: if your operation has no real economic logic, you may be left without tax deferral.

    The linchpin of it all? Article 89.2 of the LIS. The TEAC has put it at the centre. It says that if the main purpose of a restructuring is fiscal, the regime does not apply. Even if you comply with everything else.

    Second point: economic motives. They cannot be generic. They have to be clear, precise, real. The simple search for tax efficiency is no longer valid. The holding company must have its own activity or a specific role in the group…

    Third change: deferred taxation is no longer granted automatically. It can now be applied progressively. What does this mean? That if, years later, dividends are distributed or shares are sold and the tax authorities smell abuse, they can regularise. A posteriori. Even if the operation was «clean» at the beginning. This is new. And disturbing.

    Inspection is on its own

    The problem does not end with what the TEAC says. It starts with how the Inspectorate interprets it. And what we are seeing is not reassuring. In 2024, several files show that this criterion is being applied in an expansive manner. Very expansive. Even when there are favourable opinions from the Directorate General for Taxation. The Inspectorate ignores them. It considers that if the operation lacks valid reasons, it can regularise anyway. This is a sharp turn of events. And it creates legal uncertainty.

    But there is more. The four-year tax statute of limitations seems to be blurring. In some cases, it is intended to review operations from a decade ago if there are recent dividends. They justify this by saying that the «abusive effect» is materialising now. In other words, the abuse is not in the initial transaction, but in what you do with it afterwards. That, for many advisors, is playing with the rear-view mirror. The result? Companies reviewed for operations closed years ago. And with no margin to defend themselves.

    Moreover, real operations are being questioned. With substance. With logic. With structure. But which, in the inspector’s opinion, have «the smell of taxation». This subjective criterion is being used as a basis for liquidations. And it is dangerous. Because it makes any business decision potentially suspect.

    What you can do if you have a holding

    First, don’t panic. But don’t ignore this either. If you have a holding company within a group, you need to act. Review. Document. Justify. Because even if the operation is years old, what you do now may be the trigger for a future inspection.

    Step one: identify the restructurings made under the FEAC regime.

     Step two: analyse the economic reasons that justified them.

     Step three: check whether the holding company has real activity. Personnel. Functions. If not, it is time to strengthen its role. Or rethink the structure.

    Step four: prepare clear documentation. Not just minutes or deeds. Business plans. Forecasts. Internal justifications. And keep everything. Because the TEAC has already made it clear that what matters is not what you signed, but what you did and why.

    We at Confianz help many companies to resolve this type of situation. We know how to talk to the administration. How to defend operations if the time comes. And, above all, how to restructure with real business logic. Because the FEAC regime is still useful. But now it requires more rigour. More analysis. More head.

    And no, this is not a fiscal fad of the moment. It is a paradigm shift. The TEAC rulings in 2024 on holding companies mark a before and after. Ignoring it is not an option. Prevention is your best defence.

    These resolutions do not prohibit restructuring. Nor do they prohibit the use of holding companies. But they do force you to justify everything more clearly. With more economic sense. With more documentary support. Don’t improvise. Don’t copy other people’s structures. Don’t think that everything has been done because it worked years ago. The context has changed. And so has the Inspectorate.

    Shall we review your structure together?

  • The ideal time to restructure a company

    Although no company is born with the need to be restructured, growth and diversification often create challenges that make it imperative to rethink the organisational structure. But when is the right time to restructure your company? Let’s look at the key signs and some practical examples.

    Why does growth drive the need for restructuring?

    As a company grows, it is common for it to diversify its business lines, broadening its portfolio beyond its core business. This diversification, while beneficial, introduces different types of risks that need to be properly managed. Manuel Urrutia of Confianz points out that growth can generate financial and operational stresses that require restructuring to be managed effectively.

    Signs indicating the need to restructure

    1. Financial risk: If different business areas have disparate payment and collection schedules or inconsistent cash flows, it is advisable to consider separating these units into different legal entities. This strategy facilitates negotiation with investors and financial institutions, allowing for more efficient management of financing needs.
    2. Labour risk: Companies with divisions that have significantly different labour requirements, such as variations in the number of employees or union obligations, may benefit from restructuring. By segmenting these units, the labour particularities of each can be managed more effectively.
    3. Commercial or operational risk: Different business units may serve different types of customers or have different profitability margins. A restructuring allows commercial and operational strategies to be tailored to the specific needs of each segment, thereby optimising the company’s overall efficiency and profitability.

    Practical cases of restructuring in Spain

    In Spain, several companies have successfully restructured to adapt. For example, Clínica Baviera, specialising in eye care, has experienced significant growth, expanding to 135 clinics in Europe and performing 180,000 interventions per year. This expansion has required a restructuring to efficiently manage its operations and maintain its focus on reliable techniques and continuing education.

    Another example is Caser, the Spanish insurer which, under the new leadership of Juan Estallo, has initiated an organisational transformation with a clear focus on the customer. This restructuring aims to create a more flexible and market-oriented organisation, strengthening key areas such as technology, human resources and strategy.

    In addition, Banco Sabadell decided to move its headquarters back to Catalonia after several years in Alicante. This strategic move, in the midst of a takeover bid by BBVA, seeks to secure the loyalty of Catalan shareholders and to take advantage of a more stable political climate in the region.

    Benefits of well-planned restructuring

    Adequate restructuring can offer multiple benefits:

    • Resource optimisation: Aligning the organisational structure with the specific needs of each business unit allows for a more efficient allocation of financial and human resources.
    • Improved risk management: By segmenting business units according to their risk profiles, it facilitates the implementation of more effective mitigation strategies.
    • Increased profitability: Tailoring operational and commercial strategies to the particularities of each segment can lead to improved profit margins.
    • Attracting investors: A clear and well-defined organisational structure can be more attractive to potential investors, facilitating access to capital for future expansion.

    It is important to stress that restructuring is not a one-off event, but a continuous process that must be aligned with the evolution and growth of the company. As our chairman, Manuel Urrutia, points out, «when you start with restructuring, you don’t stop seeing improvement actions, so it’s a virtuous circle».

     

     

    Are you considering a restructuring for your company? Our team of experts is ready to help you identify the opportunities and strategies that best suit your needs. Contact us for a personalised consultation and find out how we can boost the success and sustainability of your business.

  • Importance of cash flow in the sale and purchase of companies

    Cash flow is the financial indicator that reflects the ability to generate revenue and thus ensures the viability of the business. Understanding its relevance not only facilitates a successful transaction, but also improves the negotiation strategy and increases the confidence of buyers.

    What is cash flow and why is it key to valuing companies?

    Cash flow, or cash flow, is the movement of money in and out of a company in a given period. This indicator covers:

    1. Operating income: from commercial activities.
    2. Necessary expenditures: operational and financial expenses.

    A positive and stable cash flow indicates that the company can generate sustainable income, an essential factor for investors looking to recoup their investment and secure a profitable return. It also provides a clear picture of the financial risks and growth opportunities that are key in a business sale and purchase.

    Relevant types of cash flow in a sale

    To understand the impact of cash flow on the valuation of a company, it is essential to understand the three main types of cash flow:

    1. Operating cash flow

    This measures income and expenses derived from the core operations of the business, such as the sale of products or services.

    • A positive operating cash flow demonstrates that the company is able to cover its operating costs and generate profits.

    2. Investment cash flow

    Related to the acquisition or sale of long-term assets, such as real estate or equipment, this flow indicates the potential growth of the company.

    • Strategic investments show buyers that the company is prepared to scale in the future.

    3. Financing cash flow

    This flow details movements related to financing, such as loans, issuance of shares or payment of dividends.

    • A negative cash flow from financing can be an indicator that the company is reducing debt, an attractive aspect for buyers.

    Relevance of cash flow in the sale and purchase of companies

    Why is cash flow so crucial when valuing a company for sale? Here are the main reasons:

    ¿Por qué el flujo de caja es tan determinante al valorar una empresa en venta? Estas son las razones principales:

    1. Return on investment

    A positive cash flow gives buyers confidence that they can recoup their investment in a reasonable time. It also facilitates the projection of future financial returns.

    2. Financial stability

    Stable cash flow reflects an efficient business model, able to operate without excessive reliance on external financing. This reduces the financial risks perceived by investors.

    3. Ease of financing

    Companies with positive cash flows are better able to obtain financing on favourable terms. For buyers, this translates into a less risky asset with greater potential for expansion.

    Discounted cash flow and its role in valuing companies

    The discounted cash flow method projects the future cash flows of the company and adjusts them to their present value, using a discount rate that reflects the associated risks.

    For example, suppose a company generates an annual operating cash flow of 200,000 euros and has annual investments of 50,000 euros, leaving a net cash flow of 150,000 euros. If we project these flows out five years at a discount rate of 10%, we can estimate their net present value. This calculation provides an accurate and realistic valuation for informed negotiations.

    Current trends in company valuation 

    Company valuation has evolved, incorporating new approaches that complement traditional methods. An emerging trend is the consideration of ESG (environmental, social and governance) factors in valuation. Companies with sustainable and responsible practices can command higher valuations, as investors positively value their commitment to the environment and society.

    In addition, the growing importance of intangible assets, such as intellectual property, brands and human capital, has led to a reassessment of valuation methodologies. These assets, although not always reflected in traditional financial statements, can represent a significant part of a company’values, especially in technology and service sectors.

    The role of Confianz in company valuation

    Cash flow is a critical indicator that ensures informed and successful transactions in the sale and purchase of businesses. From financial stability to return potential, understanding it enables strategic decisions to be made.

    At Confianz, we are experts in advising companies in the sale and purchase process, helping our clients to optimise the value of their business and attract the right buyers. If you are looking for a detailed cash flow analysis and professional guidance at every step of the process, do not hesitate to contact us. Together we can ensure the success of your transaction.