As a result of the extension of these operations in our country, buyouts sound and sound like a new buzzword in the economic media. Certainly, a change in ownership can unclog the desired development of more than a few SMEs from diverse sectors - perhaps entangled in some conflict of interest or will - and venture capital seems to be alert to these market opportunities. There are various ways in which a buyout can be orchestrated, although it almost always seems to be accompanied by a new strategic orientation aimed at the growth and development of the company; however, success is not assured: it depends on various factors, including success in formulating new goals or objectives.
Remember that we are talking about the acquisition of a majority stake in a company, either by its managers, or by private equity entities, or by private investors who become part of the management team. It can be assumed that the new management of the company will feel especially committed to the goals of consolidation and growth formulated, but we know well that success does not come easily.
With the advantageous perspective that the passage of time provides, we could perhaps study the background, details and results of some of these operations carried out in the past. I have already published the information of a Management BuyOut case (Alcatel-FYCSA-Gestlink) after incorporating some data and suggestions received from the agents involved, and perhaps the reader knows other equally illustrative cases. Now it seemed appropriate to extract or extrapolate some comments or reflections, specifically referring to the growth initiatives that usually accompany these operations.
Buy, to grow
Even if we are sure of the opportunity to grow, we must not miss the conditions that will make growth possible. In the case of FYCSA, it seemed to me that the corporate e-learning sector could not be consolidated without the satisfaction of the users, and that they had not received sufficient attention from those who made decisions regarding training in companies.
So perhaps this e-learning provider was overly optimistic, announcing to the media in 2001 (shortly after his MBO) his intention to bill 5 billion pesetas in 2003 (as I have seen, actual sales then fell to the fifth part: 6 million euros). Here we cannot talk about the success of the buyout, considering also that the FYCSA group declared in 2002 the global amount of 1,600,000 euros of losses, on sales of 6.1 million (never before in its history had this company declared losses); but there is no lack of success after buyouts.
There are, of course, many sectors in which it is possible to grow, and in which operations called buyouts fit; But I would affirm - if I may say so abruptly - that solid and sustained growth goes through - or should go through - greater attention to the expectations of consumers or users of the product or service in question.
In your case, the fact that the figure of the customer did not coincide with that of the user or consumer, should not lead to a drop in the demand for quality or effectiveness that can be transferred to the supplier.
Leaving mergers aside, in order to grow, companies, in addition to innovating, can better target their products to consumers in their market, or they can look for other markets where their products are well accepted.
In fact, and thinking about exports, months ago I learned of another resounding buyout: the case of Cosecheros Abastecedores, now with a majority presence in Nazca Capital, after negotiating with nearly 200 shareholders. It so happens that both Cosecheros Abastecedores and FYCSA are chaired by the same person, Miguel Canalejo, who was already president of Alcatel Spain, and who will surely be successful in the wine sector. I read recently, by the way, that Canalejo joined the Fenosa Union Council.
The intentions of the new Directorate of Cosecheros Abastecedores - apparently now the Vinartis Winery Group - are to include more high-end wines, and boost exports especially to the United States, Germany and the United Kingdom. The commercial network has been strengthened and the marketing and advertising budget has been significantly increased. Vinartis will surely increase its sales, and perhaps gain positions in the national ranking.
At the moment and by stopping a few lines in the case of Vinartis, we know that Canalejo criticizes the current Denomination of Origin system: "Spanish wine has a competitiveness problem abroad: appellations of origin." As I saw in an interview published in Expansión, his criticisms are mainly directed at the denominations of Rioja and Ribera del Duero.
Perhaps this new wine entrepreneur is thinking of having a possible denomination "Wines of Spain", beyond the current "Produce of Spain" in its table wines. I think that in this regard the debate is open in the Spanish wine sector, and hopefully it will be resolved to everyone's satisfaction, without prejudice to the good image of our wines abroad.
Also and to speak of another case, the entry of Suala Capital in Paconsa seeks to strengthen the leadership of this group in international refrigerated transport, supporting its ambitious growth plans. We could also refer to Household Items, but I think that no more examples are needed: it is typically pursued to promote growth.
But I did want to show you a no-brainer: each sector is a world, full of sensitivities, expectations, balances, concerns, relationships… In wine, as in gastronomy and others, there is a visible attachment to work and product: a remarkable presence of emotions; Let us hope that the arrival of venture capital, national or foreign, does not detract from feelings of an ancient tradition.
They have almost nothing to do with it, but I would highlight the strong contrast of this wine sector (hitherto characterized, as I was saying, by a great presence of autotelic professional vocation and a visible satisfaction with quality achievements) with the image of the other what I was talking about -corporate e-learning-, transmitted by José Ignacio Díez, CEO of FYCSA and vice president of the Association of e-Learning Providers (APeL). When talking about the quality of the content of online training courses, he told us in a book last year, 2003:
“The contents have been magnified during these past three or four years, without the reason being well understood. It is obvious that the more attractive they are and the better they have developed pedagogically, the greater will be their acceptance by the students; but it is not clear that this is the key to self-study. Who more and who less has been forced to acquire complex knowledge with precarious means. Let's remember the university (…) with photocopies of the notes of the most studious of the class: more precarious contents, impossible ”.
In the same book of the Aedipe Library, Díez, provider of content and e-learning services, recommended to companies to measure their investment effort in training content and pointed out that “the success of online training lies in its greatest measure in the choice of methodology and, in addition, in motivational elements of people… ".
We cannot imagine Díez as a winemaker, saying that the quality of the wine does not matter as much as the method of consumption and the thirst of the consumer; but surely his statements have some foundation in the corporate e-learning sector. The strategic ideology of FYCSA is right or wrong, the truth is that it has remained in a fifth of the sales pursued after its MBO, despite having merged with ECG (Barcelona consultancy), and despite the fact that its sector is growing.
So a buyout does not guarantee success, but - excuse me for the truism - heralds a strategic or tactical change typically aimed at growth or consolidation. It would, of course, be a shame to orchestrate a buyout, create new expectations, and then fail.
In this regard, the efforts of executives to proclaim economic achievements to achieve and to preach doctrines that are sometimes more sectarian than sectoral, are striking; the reader will have his point of view, but I often think that it is already more of a competition in the media and less of a competition of qualities and prices. This is very complex and marketing is essential, but it would not be surprising if consumers and users began to be suspicious of those who seem to place a lot of emphasis on the statements and the business, and less on the quality of the products or services offered.
New business goals
After the buyouts and as we suggested, the management teams seem to have a tendency to make pronouncements, and these often refer to climbing positions in the sector ranking, and can point to the same leadership if it continues along the usual path of acquisitions and mergers..
All of this can be healthy and legitimate… but put yourself on the consumer's skin for a moment. I believe that it seeks quality at a fair price, and that it will not insist on buying "brand" if it does not find a sufficiently favorable relationship between those parameters. But put yourself also in the shoes of the professional involved in the company, in the knowledge worker, in those of those who are close to the products or services that are sold… Why will they feel more proud, for leading the market, or for offering the best to customers and society? I hope both things coincide…
All of this is complex, but they will agree that the obsession to lead the market should gradually give way to greater customer and user satisfaction. That one - the obsession - seems typical of ambitious entrepreneurs and executives (I don't mean greedy, but also), but it should come perhaps as a consequence and not as much as an end.
From the bold point of view of this writer, if we satisfy customers more than our competitors, we will end up leading the market, but if we simply seek to lead the market because of that - or through that - that "big fish eats small fish", let us know which is now also often "fast fish eats slow fish". And that "the fish dies through the mouth." However, we also know that the Three Kings are the parents, and that large companies have the power to reduce small companies that could offer higher quality at a better price…
To ensure the growth of the company by way of winning clients - and not just catching them -, I would insist on the need to open up a greater path to the professional vocation after goals welcomed by society, and to slightly close the stopcock of the imperial ambition, or short-term results.
Perhaps the reader remembers the case of some CEO of a large multinational company trying to mobilize their organizations after goals such as "leading the market in… in our country", or "getting the EFQM quality award". I am not talking about the mercenary CEOs that even Fortune magazine deals with, but rather about the leading CEOs, eager for achievement; but reflect for a moment on these types of goals.
Perhaps there are those who align themselves better with other goals or "visions" of greater social orientation, such as "good wine at all tables", "effective and enjoyable learning served by PCs", "each person with their mobile phone", or " Internet for every student ”, or“ flat screens in every home ”, or“ silent appliances in all kitchens ”, or“ clean energy ”, or“ high quality frozen food ”, or“ flat tires on all cars ”, or“ houses without leaks ”, or“ ergonomic mattresses ”, or“ dentures without cavities ”, or“ a world without AIDS ”, or“ shoes without pain ”, or“ taps without leaks ”, or“ diagnostic instruments zero defects doctor ”, or“ safe computers ”, or“ socks without tomatoes ”, or“ non-polluting cars ”…
conclusion
There is no doubt that many companies need new ideas, which are the fruit of broader horizons and visual acuity; but since all that glitters is not gold, good work must be a constant before and after buyouts. New opportunities arise in these times and should not be missed; To a certain extent, it seems to me that this is what may be happening in the corporate e-learning sector, but the reader will have their own examples and opinions.
In general, changes in ownership create doubts and fears in the companies' population; panic tends to spread in some and euphoria in others; Those may be accompanied by cultural and sociopolitical transformations in the organization; the new order can destroy, in its path, the bad and the good. Managers are in a hurry to generate results and they can be artificial, so perhaps you shouldn't talk about success or failure until a few years have passed.
And perhaps, just in case, after the buyouts one would have to be cautious in the statements, and wait for the arrival of success to savor it, in any case avoiding complacency and boasting (personally, I think that these bring bad luck). In other words: let's not rush to sing the beginning, just in case we have to sing the palinodia.
I do not know if there will be many readers who come here (thanks for doing it), but I wanted to underline the need to have, after the buyouts and of course, the clients and consumers or users, but also with the people of the organization, without whose rational and emotional adherence cannot be bet on the solidity of any growth.
Without a doubt all this is more complex but, for the benefit of society and when pursued in haste after the buyouts, the growth of companies should be a consequence of the conquest of customer wills, and not just the disappearance of competitors. Canalejo is probably right when he announces that of the five hundred table wine brands (in Spain), there will only be three left…, but as a consumer I am a little scared by the loss that comes with the possibility of choosing.
