When an entrepreneur wants to sell a company, he must also have a goal for that sale, as well as think carefully about who he is selling the company to, entrepreneurs and bankers agree, and many jobs and the growth of the entire economy depend on the survival of small and medium-sized enterprises, which became particularly evident in the midst of the covid 19 pandemic.
Serbia’s economy, like most of Europe’s, is significantly dependent on small and medium-sized enterprises. Out of a total of 103,233 business entities in Serbia in 2021, as many as 102,644 fall under micro, small or medium enterprises.
“The moment when the owner wants to sell the company is a very good sign”, said Vladimir Ivanovic from Unicredit Bank at the meeting held by “Ja Preduzetnik” this week in Fruška Gora. Speaking at a panel attended by business representatives who successfully sold their companies, Ivanovic added that banks “look favorably on the sale process” because it is “a sign of the company’s maturity” since new investments create new value.
Entrepreneurs and owners of small and medium-sized businesses often find themselves in the middle of nowhere because they are unable to work at the pace they did at the beginning of their careers. Then a number decide to look for strategic partners, while others opt for investment funds – of which there are not many in Serbia itself.
Experiences with investors and funds
When you have a partner, everyone learns from each other, said Bojan Stevanović , founder of Hauzmajstor – a company that started with an organized system of small home repairs and now deals with real estate management and maintenance.
The Hausmeister company was bought by the Rustler Group, which is run by the Rustler family. “They were not corporatized” when they came to the first negotiations in Belgrade, said Stevanović. This old Austrian family then started opening a large number of companies and expanding internationally, and what they liked most about Hausmeister was the quick organization of work – which they themselves did not have.
Stevanović added that he initially hoped to get great “know-how” from Vienna, but that the Rustler Group at that time was more focused on traffic and real estate management, so over time they expanded the business together and developed the skills of the team. Both sides “stole” from the other what it was worth, said Stevanović.
With investment funds, it is similar because they automatically push towards rapid professionalization and corporatization, but their goal is solely profit.
The founder of the Gomex trade chain, Goran Kovačević , explained that he realized that he had to take the next step for his company when a friend of his died in his thirties and when he saw how many problems the company he left behind created for the family.
Kovačević emphasized that he chose stability through cooperation with investment funds, but also that he made several mistakes in that process. Now he believes that the SEAF fund paid too little to Gomex when they entered it as a minority owner in 2007, but he does not regret it because they introduced professional management in the company and enabled further business expansion.
“You have to know exactly what you want”, said Kovačević and added that it is important to know when it is the beginning and when it is the end.
Kovačević noted that people in Serbia often think, because of “bad American movies,” that the fund’s intention is to “defraud and steal… but that’s not exactly the case.” He added that the goal of the funds is to exit and have an accurate calculation themselves. “If you play it right and you’re not stupid, you end up with a pretty decent offer.”
The founder of Gomex, who is now the chairman of the company’s board of directors, said that when entering into cooperation with an investment fund, an entrepreneur must know that he has two options: one is to return the ownership in full – which he must do within about five years, so that the investment would pay off the fund but also so that the company would not grow too much so that the founder does not have the means to buy it; and another possibility is that the founder leaves 100 percent.
Kovačević said that he himself realized that the first variant was not an option for him because the company would once again depend only on him personally, and expansion would be more difficult for Gomex due to the great competition on the market represented by global chains such as Lidl and Delhaize. So he decided to gradually reduce his share in the company.
This year, Gomex arranged the exit of SEAF by jointly agreeing to sell a majority stake in the firm, which was bought by the CEECAT fund.
“The new fund is different” because it is a little bigger, Kovačević said, but he also emphasized that it is important to assess what kind of fund suits the company, because a large fund will not deal enough with the business of a company that is not interesting enough.
Strategy is key
However, as Kovačević mentioned, one should be careful with funds and it is very important to agree on a long-term strategy in advance.
Ivanovic also agreed that strategy is important, noting that banks, when financing the purchase of shares in a company, always look at non-financial indicators in addition to financial indicators. He added that there are currently three major challenges on the market in Serbia: lack of domestic investors, i.e. domestic investment funds, strategic planning and economic situation.
The importance of strategy was emphasized by Dr. Jasmina Knežević , the founder and initiator of BelMedic, which this year entered into a strategic partnership with the Turkish company Acibadem.
“I made an assessment that we have experienced our maximum – we still have 10, 20, 30 percent, but we could not make 300 percent, and as the market grew, it had to happen because the competition would eat us up very quickly”, she said.
Many investment funds were interested in BelMedic, added Knežević, but it was important for her to find a strategic partner. However, she advised all entrepreneurs to also talk to investment funds in order to learn early what their options are and thus decide on what suits them best.
“Everyone teaches you how to get into work, but no one teaches you how to get out of work”, concluded Knežević, Bloomberg Adria writes.
