Connecting the Dots – Gold Magazine
Falling on difficult times, feeling jaded, lacking succession planning: these are all good reasons to feel disillusioned with one’s business. But hope is at hand. Marios Chiromerides, Managing Director of Connecor Investments, explains how the newly opened Nicosia-based office of this international transfer agency aspires to partner buyers and sellers alike, to mutually beneficial ends. With Connecor connecting all the dots, the process of exiting a business is entering a new era.
What are Connecor Investments’ main practices and what do you offer clients?
Connecor is a business transfer agency. We act as intermediaries between owners and future owners of small and medium-sized businesses (SMEs), tangible and intangible assets located in Europe, Latin America, Southeast Asia and the Middle East, and we assist them during the process of transfer of ownership. We help current business owners successfully plan and execute a transfer of, or exit from, their business or business assets by finding new owners (successors, MBI/MBO, buyers or investors), while they can keep on doing what they do best: i.e. staying focused on running their business and making sure it continues to operate smoothly.
An exit strategy is a comprehensive road map that enables business owners to successfully exit a privately held business. It asks and answers all the critical questions that business owners and their advisors must consider when the time has come for them to part with a business. We are in a position to estimate the value of a business and to look for interested buyers. Moreover, we can handle initial potential buyer interviews, discussions and negotiations with prospective buyers, facilitate the progress of due diligence, and generally assist with the business sale and transfer processes. Together with financial and legal experts, we will develop a tailor-made solution to ensure the transaction is carried out in the most tax-efficient manner. We will draw up the necessary contracts and protect all parties involved against unforeseen events, future claims and contingencies. Finally, we help interested investors in finding the appropriate company, business or assets for them to acquire.
What is Connecor’s core mission? How do you ensure – in both daily execution and wider planning – that it is fulfilled?
Our mission is to connect buyers and sellers of businesses. Selling a business is a process. The more complicated a business is, the more complex issues will arise during the transaction and, of course, the more time is required to successfully complete this process. In addition, each owner of a business has different circumstances underlying his or her decision to exit the business, so the timeframe for completion of each transaction can vary from one week to several years. Therefore, methodology is very important. We take a step-by-step approach to selling a business by understanding business value drivers and providing an opinion of value; by performing market research to identify potential buyers; by preparing promotional material; by making preliminary approaches and short-listing interested buyers; by conducting negotiations and deal structuring, and, finally, by coordinating all the professionals involved to close the deal. To fulfil our mission, Connecor has designed a full package of business transfer services covering legal, accounting, tax, commercial and other issues in mid-market transactions. Our most important asset is our network, with our own offices in Barcelona, Amsterdam, London, Singapore, Shanghai and Hong Kong as well as 40 associated offices in over 30 countries worldwide through Amicorp, our major shareholder. We have the ability to structure complex, international transactions and close deals that are beneficial to all parties involved, because we can offer a total package including tax-friendly solutions, legal structuring and commercially viable operations. Finally, confidentiality is key to our success.
Clear strategy and careful planning seem to be of paramount importance to Connecor. Will you be leading by example in the Cypriot market?
A very well-thought strategy is the basis for commencing a business and it is perhaps the most important ingredient in making the business successful. A clear strategy, however, must also be accompanied by a touch of flexibility, so as to adjust planned actions and meet targets. Whereas Business Brokerage is a very widespread and organised service in the USA – and also moderately active in Europe – it remains to date a fairly under-represented service in Cyprus. Competition for transactions in the SME market is quite mixed and can be sometimes confusing as a number of parties attempt to offer this service, but only a few specialise in the way Connecor does.
Connecor has a methodology of doing things: we offer a niche service by focusing on serving SMEs and assets in that category, which is a difficult market to serve, especially for bigger transactional offices. We have our own methodology of approaching clients, of promoting businesses and closing deals. A new way of doing things can prove successful if communicated correctly and if the client is willing to be educated on the most beneficial way of selling a business. We are here to stay and we’ll invest time in educating our clients on how they can focus on the business while we focus on the deal!
Speaking of the deal, how big a challenge is it to partner a buyer and a seller? What does the process involve?
The search for serious buyers or sellers of businesses is a complicated and time-consuming process, which makes partnering them an even more interesting challenge! Most business owners don’t really know where to find a successor or buyer of their business. What most business owners need to understand is that planning how they exit their business is even more important than how they started it! Preparation is key to selling a business. The most common mistake business owners make is that they spend their life and savings building a business, which might not be ready to be sold when the time comes for them to exit. They end up not knowing when to exit the business; most of the time, they don’t even know the real value of their company and so they end up becoming reactive rather than proactive. In the case of a buyer, acquisitions can satisfy a number of goals if approached and executed as part of a long-term strategy. Some of the typical reasons executives pursue acquisitions can be: to accelerate revenue growth or capture market share; to enter an adjacent market; to expand into a new geography; to access new customers or technology; to strengthen their talent pool; reduce their costs, or perhaps to outwit a competitor.
A buyer will never pay for a business on its potential but rather on what has been achieved so far. They want to buy the future but only pay for the history!
Our company is in a position to identify buyers and sellers better than any other organisation. To “buddy” a business successfully with a future owner, you firstly need to prepare the business, present its selling points appropriately and ensure that the future owner is convinced that he or she is buying something worth paying for. If the business owner is open to listening to advice, then he or she has a good chance of selling the business.
How have clients responded to Connecor so far? What feedback have you received?
Despite our minimal marketing efforts over the past three months, I have been approached by a good number of clients from a number of different industries who are in need of our services. Some businesses lack succession planning, some need to sell because of owner fatigue, and others are facing financial problems due to the crisis. In addition, there are many interesting projects in the pipeline that need funding to be completed. All these are potential clients for Connecor.
On the one hand, the current economic environment is not favourable for merger and acquisition (M&A) activity, due to serious financing constraints and GDP corrections. On the other hand, M&A can be favoured if the right sellable business with inherent value is identified, is selling at a reasonable price, and is matched with the right investor. Our job is to work as transaction brokers, for the deal to be completed.
The toughest question that every business owner must address is whether they are building a business worth buying. They need to look at their business from a buyer’s perspective, without much sentiment. Furthermore, during a transaction, the owner needs to be your partner in the whole selling process.
With Cyprus having suffered a notoriously difficult year, why the decision to open an office in Cyprus? How far is Cyprus an attractive base?
Connecor already has six offices worldwide, with Cyprus being our seventh. The market has enough interest in terms of businesses and assets for sale that will attract international investors but, most importantly, we are here to close deals originating from the Middle East, Russia, and possibly Greece. The geographical advantage of Cyprus to the Middle East and Europe is important, as well as the strong relationships of Cyprus with Russia and countries in the Middle East. These markets are already familiar with the favourable tax regime in Cyprus and the widely-used DTTs for structuring. Thus it made perfect sense to open the office in Cyprus, especially at this point in time in view of the prospects of oil and gas findings.
Having most recently held the position of general manager of The Mall of Cyprus for over six years, why the transition to Connecor? What present and future opportunities do you perceive in the Cypriot market for Connecor?
Working for the Shacolas group and setting up and managing The Mall of Cyprus from the beginning was a great experience for me. This special project will always be in my heart. It remains, to date, the first and most successful shopping mall in Cyprus, and I am definitely very proud to be a part of its history. However, after six plus years in one position, no matter how important this position can be, there is a limit to how much value one can add and a limit to how much one can learn. The time had come for me to move on, to do something new and equally exciting! Connecor gave me the opportunity to move on from managing and growing a business, into another dimension: interviewing, advising, promoting, selling, and finally transferring a business. One of my personal goals in the next five years is to actually be able to sell at least one shopping mall in the region! Even more importantly, though, my new job allows me to have international exposure and interaction.
With the Cyprus office of Connecor focused on local transactions, as well as those in Russia and the Middle East, what energy is being felt between Russia and Cyprus, and the Middle East and Cyprus, for future business growth? Is Connecor supplying for the demand, or actually driving the growth?
Cyprus has always been a good business centre for investment to and from Russia, and now increasingly for the Middle East. Our highly-educated workforce, strategic location, favourable tax regime, large number of double taxation treaties, excellent professional services, infrastructure and many other advantages mean that Cyprus is a place for doing business. Current sentiment is not as great as one would wish in view of the Eurogroup aftermath, and growth will take some time to return.
Due to the crisis, businesses are actually selling at a discount. SMEs are still beautiful and are becoming even more interesting due to the potential of technology transfer. For a good business, there is always a good price and a good time to sell, but in order to get maximum value from selling a business you must get an expert to do it. Connecor will be a connecting bridge between investors and business sellers and will hopefully be able to contribute to growth in the years to come.
What are your thoughts on the idea of a concerted Cyprus, with all members of the business community working to collectively promote Cyprus as a trusted, reliable business environment? How might this be achieved?
That would be ideal and it’s partly taking place already. When you take away politics from business, it’s easier to have one voice. We are all international business ambassadors and we should definitely all work in union to promote Cyprus, especially because Cyprus has a business environment worth promoting. To name a few, the efforts of associations like the Cyprus Chamber of Commerce and Industry (CCCI), the Cyprus Investment Promotion Agency (CIPA), the Cyprus International Business Association (CIBA), the Cyprus-Russian Business Association (CYRUBA), and other bilateral Cyprus-country associations are contributing towards this goal. The effort needs to be collective and orchestrated towards that direction. The Government also seems to be making a major step in the right direction with visits from the President and other government officials to countries that can prove good investors for Cyprus. Constant and updated dissemination of information to all business parties allows the concept of a concerted Cyprus to flourish.
Finally, what are Connecor’s goals for 2014? What do you hope to achieve?
The Cyprus office is creating a quality portfolio of SMEs and Asset client listings that we will be engaging, promoting and hopefully eventually selling in Cyprus, the Middle East, Russia and Greece. Furthermore, our regional focus will allow us to extend our lists of interested buyers and will enable us to create specific business search engagements for them. We will build branding and we aim to position Connecor as one of the leading intermediaries for SME transactions, by utilising our international network of offices and associates. Our global presence will allow us to identify opportunities in a variety of markets. Hopefully we will contribute in our own way in restarting the economy and ensuring that Cyprus maintains a strong position on the business map.
Read the article on: www.goldnews.com.cy