SStarTrade SA

Management & Strategic consulting

Before deciding to merge with a competitor, to sell or buy a business, Clients need to analyze all possible strategic alternatives. One must analyze market trends and the players, monitor technology changes and strategic alliances. This analysis not only requires experience and a thorough knowledge of the industry it operates in, but also understanding of the market as a whole.

We can facilitate strategic sessions and review business-plans or conduct a scenario analysis and assist in building a financial model.

We also have wide experience of the strategic and management consulting directed to the choice of strategy optimization for the enterprise considering intentions and opportunities of shareholders, necessary resources for one or other strategy, risks and opportunities given by the external environment.

Mergers & Acquisitions

Corporate Mergers is one of the most common paths of development companies are taking today. On one hand, a merger provides an opportunity to effectively deal with competition and, on the other hand, increases the chances of further development via acquisitions, as well as allows to use the benefits of scale.

Business mergers are some of the most complex types of deals, both in terms of the process and the subsequent integration of two corporate cultures into a truly consolidated business.

Therefore, in the course of the organization of merge the parties of the transaction need to solve a plethora of basic problems:

  • strategy for the development of combined businesses and size of the potential synergy;
  • valuation of the companies being combined to calculate the stock exchange ratio;
  • transaction structure, rules governing the relationships between the stockholders after the merger;
  • candidates for the management positions in the combined company.

Natural growth of a business or its expansion through acquisitions of other companies are two possible ways for any company. They perfectly complement one another and do not come into conflict.

Acquiring a business in a strategically important industry or key region may provide a number of significant benefits, such as saving time in a fast-growing industry, buying assets at a price significantly lower than the price of «greenfield construction», or expanding a company's line of products.

In any case, the buyer needs to conduct a careful preliminary analysis to identify synergy value and risks of buying a new business.

After identifying a list of target companies and rough valuation parameters, the next priority is to structure the acquisition process so that the buyer can perform a comprehensive assessment of the target company and get as many guarantees and affirmations as possible in the legal documentation for the deal.

Moreover, further detailed analysis of potential synergy from buying a company and combining it with the existing business must be done, as well as analysis of the risks associated with integrating the businesses together.

Being an independent firm, we offer our client impartial advice on the strategic importance, fair value and the most acceptable structure of an acquisition to make sure that our client can avoid or be insured against the risks existing in the acquired business.

Disposals

Business owners often face the choice: further develop their business or sell it. Already at this stage there is a need for a financial adviser. The value of such an adviser is his ability to look at the company without the emotional bias typical of business founders, review all possible business development scenarios and offer the client an impartial outlook on the company.

Essentially, this can be considered a strategic advice to help stockholders take a balanced decision regarding the future of their asset.

If the owners decide to sell their company, a financial adviser can help arrange the process so that the client gets the highest price possible for their asset, while offering adequate level of guarantees to the buyer.

A key element in arranging any business disposal deal is to identify potential buyers:

  • Identify the right value of the asset both for the seller and for each possible buyer;
  • Properly position the company and the sellers in relation to each possible buyer;
  • Select the optimal strategy for the disposal process.

Our company has considerable experience in executing business disposals in various fields. Being independent and free of conflict of interest, we have advised sellers on multiple occasions arranging best possible tender processes engaging a wide range of financial and strategic investors.

Debt financing

Developing a solely self-funded business is not economically justified, since you have to reach and keep a certain growth rate while at the same time providing stockholders with the required return on invested capital.

Besides providing the resources to meet the current and long-term business needs, debt financing enables you to maximize growth opportunities existing on the market.

We have extensive work experience with banks providing debt financing and therefore we offer the following debt raising services:

  • analyze the client development/project strategy and current financial standing to determine the best financing options;
  • assist in preparing the documentation required by banks and other financial institutions;
  • negotiate the best possible terms and conditions of lending.

Our experience in this area and the extensive, continuously growing connections among financial investors and banks guarantee our clients a successful and relatively fast access to debt financing to implement either certain projects or a chosen business development strategy.

LBO / MBO

Leveraged buyouts (LBO) involve institutional investors and financial sponsors making large acquisitions without committing all the capital required for the acquisition.

To do this, a financial sponsor will raise acquisition debt (by issuing bonds or securing a loan) which is ultimately secured upon the acquisition target and also looks to the cash flows of the acquisition target to make interest and principal payments.

Acquisition debt in an LBO is therefore usually non-recourse to the financial sponsor and to the equity fund that the financial sponsor manages. Typically, the debt portion of a LBO ranges from 50%-85% of the purchase price.

This kind of acquisition brings leverage benefits to an LBO's financial sponsor in two ways:

  • the investor itself only needs to provide a fraction of the capital for the acquisition;
  • assuming the economic internal rate of return on the investment (taking into account expected exit proceeds) exceeds the weighted average interest rate on the acquisition debt, returns to the financial sponsor will be significantly enhanced.

The most likely LBO targets are companies with low credit risk. In such a case, the positive factors for a leveraged buyout decision are stable cash flow, low financial leverage and predictable level of capital expenditure.

Management buyout (MBO) is a variation of LBO, where a company's managers buy out their own company. Typically, it is used when a company is economically depressed and its owners refuse to continue financing it.

In most cases, MBO is done with he helps of third parties — banks or private equity funds, as managers usually do not have sufficient resources to acquire the company.