Sell-side advisory in the Dominican Republic

A sale is a decision before it is a transaction

For most owners, selling the company is the largest financial transaction of their life, and it happens once. The counterparty has usually bought companies before. That asymmetry — in experience, in information and in patience — explains more bad outcomes than price negotiation ever does.

Three questions are worth answering before price is discussed: what the business is genuinely worth and why, what the shareholder wants from the transaction beyond the number, and what needs fixing before it is examined closely. A process that starts from an offer rather than from these questions is negotiated at a disadvantage from the first meeting.

When owners consider a sale

• Succession without a successor. The next generation does not want the business, or is not in a position to run it.
• Shareholder transition. A partner wants out, or the owners no longer agree on direction.
• A liquidity decision. Holding the family's wealth in a single undiversified business stops being reasonable.
• Strategic exit. The sector is consolidating and the scale required to compete exceeds what the company will reach alone.
• A growth opportunity that needs a different owner. The plan is sound but requires capital or capabilities the current shareholder will not provide.
• An unsolicited approach. Someone has made contact, and the owner needs to know whether the number is reasonable before replying.

What a sell-side adviser does — and does not do

In this market the sale of a business is often associated with brokers, whose role is to find buyers and intermediate the transaction. That is a legitimate and quite different function, and the distinction matters when deciding who to call.

Valnova is neither a broker nor an investment bank. We do not list businesses for sale, we do not intermediate transactions, we do not underwrite or place securities, and we are not paid for introducing parties. Our work is the financial analysis on the seller's side:

• Establishing and defending what the business is worth, with the assumptions visible.
• Preparing the financial information a counterparty will require.
• Assessing offers — not only the headline figure, but payment structure, conditions and whatever is left contingent on future performance.
• Supporting the financial discussion of the negotiation, on the shareholder's side of the table.

One practical consequence of working this way: our fee does not depend on the transaction closing, so the recommendation can be not to sell, or not to sell yet.

Preparing a company for sale

Preparation is the stage where the owner still controls the outcome, and it usually influences the final price more than the negotiation does. It generally involves:

• Understanding value and its drivers. The starting point is a business valuation that explains what supports the figure and what would move it.
• Organising the financial information. Consistent statements, normalised results and a clear separation of recurring from exceptional items. A buyer who cannot follow the numbers discounts for what they cannot follow.
• Identifying what a buyer will flag. Customer concentration, founder dependence, erratic working capital, personal expenses mixed into the business, informal contracts.
• Defining the shareholder's objective. Selling outright is not the same as selling a majority, staying on for a period, or bringing in a partner. Each attracts a different kind of counterparty.
• Testing whether the timing is right. Sometimes the reasonable conclusion is to prepare the business for a period and return to the market later.

How a sale process typically unfolds

Processes vary considerably with the size of the company, the type of buyer and the shareholder's objective. Broadly, a sale tends to move through these stages:

1. Strategic assessment. What alternatives exist besides selling, and what each would mean for the shareholder.
2. Valuation perspective. A supported range and the assumptions behind it, established before any conversation begins.
3. Preparation and positioning. Organising the information and building the financial case for the business.
4. Conversations with counterparties. Under confidentiality and, where the process calls for it, with the relevant specialists involved.
5. Offer analysis. Comparing proposals that are rarely comparable: amount, structure, deferred payments, conditions and warranties.
6. Negotiation and closing. With the legal, tax and due-diligence coordination each specialist provides.

Valnova's role sits in the financial analysis, preparation, offer assessment and negotiation-support stages. Buyer search, legal documentation and due diligence are led by the respective specialists, and the specific scope is agreed at the outset of each engagement.

Why valuation comes first

Almost everything that happens in a sale rests on the valuation work: the range that determines whether an offer is reasonable, the assumptions a buyer will challenge, the reading of a deferred payment structure, and the argument used to defend the price.

That is why a conversation about selling usually begins by establishing what the business is worth before a transaction, rather than the other way round. The analysis built there is the same analysis that carries the negotiation.

What changes in a Dominican sale

• Few published transactions. Observable evidence of what comparable businesses have sold for is scarce, so the value argument is built from the business rather than from the market.
• Predominantly family ownership. Where the performance of the business needs separating from the decisions of its owners before it is presented to a third party.
• A narrow buyer universe. In several sectors the credible buyers are few and know one another, which makes confidentiality a practical concern rather than a formality.
• Cross-border acquirers. An international buyer brings different reporting expectations and documentation standards than a local one, and tests assumptions a domestic buyer might not.
• Currency exposure. Businesses earning and spending in different currencies need that exposure modelled, because the buyer will price it.

Valnova's experience

Valnova Partners is a boutique financial advisory firm founded in 2019, with its office in Santo Domingo.

• Verifiable sell-side experience. Our track record includes sell-side valuation and negotiation support for the sale of a portfolio company of ARV Group, as sole adviser to the family board, and sell-side valuation and negotiation support for the sale of an automotive dealership, in collaboration with Moonshot Advisory.
• Accredited professional judgement. Nicolas Diaz Garelli, Partner, is a CFA charterholder with more than 15 years of experience in private equity transactions, valuation and investment structuring, and M&A experience in the Dominican Republic and Central America. The firm works to the CFA Institute Code of Ethics and Standards of Professional Conduct.
• Advising boards. We have acted as sole adviser to boards of directors and family boards in financial decision processes.
• Sector breadth. Healthcare, hospitality, industrial production, energy, real estate, banking, insurance, commerce, retail, food and beverage, and pharmaceuticals.

Frequently asked questions