The term ‘brokerage’ has a number of different meanings and connotations attached to it. A quick search on the web will land quite a collection of these. In its strictest sense, however, the Maltese word for brokerage, ‘senserija’, is probably the most accurate term and also one that most people are familiar with.
A ‘sensar’ is a person or entity whose task it is to bring together buyers and sellers, having done enough background work to ensure that, once this happens, there exists a true meeting of intents and purposes between these parties.
It is this very raw definition that provides us with the necessary insight into understanding the functions of a corporate broker or, indeed, those of a firm providing corporate brokerage services.
The fast pace of technological innovations and the process of globalisation have completely altered the way business is carried out on the international markets. Inevitably, this revolution has also impacted the Maltese business community. Just as inevitably, the process of change has made our business leaders understand that in today’s business environment, a company has to be treated like a living organism and that a company doing well may not be so successful tomorrow unless it continues to evolve.
Needless to say, business evolution can mean different things to different people. There will be businesses that will seek to consolidate their position in the market through the acquisition of other companies. On the other hand, there will be those who believe that merging with a competitor would be the best way forward.
At the same time, there will be entities whose shareholders are looking to divest of their assets –including shares – whether in whole or in part. This can happen for various reasons, such as, succession planning, to raise capital or because a particular sector of the company does not fit in with future expansion plans.
The fast pace of technological innovations has completely altered the way business is carried out
Over the course of a series of articles, we will seek to analyse these reasons and explain why a business owner would want to buy into another company’s equity.
We will also look at the situations during the lifetime of a company where buying or selling equity could be considered as the best possible option for either party. We will also examine the pivotal role that the corporate broker can play in this scenario, being in the perfect position to offer various solutions to cater for the diverse situations coming to the market.
Every company is different, every company has its history and its strengths. Through a thorough knowledge of current market conditions, a broker will be in a position to ensure the best possible outcome for all parties.
It is quite common to hear business owners say time and time again that if anyone had to offer them the right sum of money to acquire their business, they would gladly sell. You have probably heard them too, or you may even be one of these people. There may, of course, be many reasons why company owners would want to sell their shares and just as many reasons why others would want to buy them.
It is this that creates the right environment for the development of an active market for the buying and selling of company shares. The presence of an organised corporate brokerage firm can be the catalyst for the development of such a market by facilitating the bringing together of buyers and sellers to the negotiating table and to the eventual closing of a satisfactory deal to both parties.
This is because a corporate broker would have on its database details of companies already indicated to the broker and whether they would like to buy or to sell. The corporate broker would therefore be perfectly placed to provide both buyer and seller with all the necessary information both parties would require to make an informed decision.
All this work is carried out in the most confidential manner, bearing in mind that information being passed around is of an extremely sensitive nature, as well as the fact that the Maltese business community is a fairly small one.
Alain Guillaumier is a management consultant at Baviere – Corporate Brokerage.