CRISIS AS A BUSINESS OPPORTUNITY

The advance in commercial relations between countries, especially in technological assets, has significantly increased dependence between economies. Although they are essential to economic growth, their high dependence can also have disastrous consequences, affecting the entire global production chain. The 2008 Crisis can be considered a great example. Financial problems are practically inevitable in the event of a Crisis. Governments, companies, and families are affected, each in different ways, but a common effect is the commitment of capital. According to data from IPC Marketing, families with an average monthly income of around R$ 3 thousand were the most affected by Covid-19, ceasing to consume R$ 105 billion in 2020. According to data from the same survey, families with an average monthly income of R$ 25,000 will also be greatly affected, with their purchasing power reduced by more than 10%. In the first half of 2020, faced with the crisis caused by Covid-19, it has already been possible to notice several companies filing for bankruptcy. Others had their revenues reduced to such an extent that they were forced to reinvent themselves. Companies are not the only ones to reinvent themselves and adapt, it was also possible to observe a change in the pattern of consumer behavior. This new behavior, however, can create a favorable situation for entrepreneurs to be able to extract opportunities in the development of new products and services, as the publicist Nizan Guanaes already said: “while some people cry I sell handkerchiefs.” According to”Brazil Journal”, the crisis caused by SARS in 2003 was highly beneficial to the growth of the startup Alibaba, today a global e-commerce company invested in Softbank, a Japanese company. At the time, due to a Lockdown imposed on the Chinese population, the company's main employees got together to work at the house of one of the co-founders, Jack Ma, to finalize the development of Taobao, currently the main marketplace of Alibaba and which directly influenced its market value to reach almost R$ 2 trillion, and to mark the beginning of the e-commerce era in China. Another great example of success resulting from crises is Nutella, which appeared during the Second World War. Cacao had sold out all over Italy and it was at that moment that the entrepreneur and pastry chef Pietro Ferrero decided to create a cheaper custard, made from hazelnuts, sugar and with little cocoa. The custard quickly achieved success in much of Italy, which at first used it only to be placed on a cake. In 2019, the Ferrero Group recorded EUR 11.5 billion in revenue. More current examples are Uber and Airbnb, both of which emerged in the period after the 2008 recession. Uber rapidly expanded its base of drivers and users due to the crisis the U.S. was experiencing, with unemployment rates surpassing the 10% barrier for the first time since 1983, according to data released by the U.S. Department of Labor. O Timming perfect for putting into practice the Business plan was the crucial factor in success. Today the company is valued at U$ 83 billion. Airbnb began in the same period as Uber, with a “sharing” marketing concept, giving the customer the option to stay at the home of someone who is willing to share their space and, in exchange, pay more affordable rates. O Timming The post-crisis period was once again very important for the success of the business, which today is valued at U$ 31 billion. The examples above summarize that business models do not simply disappear, but are reinvented, creating needs for those who know how to see them. That's how the American company Zoom, created by startup Zoom Video Communications had its shares valued at 280% in 2020, even though the US stock market suffered a major negative impact due to Covid-19. In addition to the development of new ideas, such as those mentioned above, it is also during periods of great financial stress that more capitalized companies take the opportunity to make acquisitions of competitors or complementary assets. As covered in the article M&A: MOTIVATORS AND PERSPECTIVES these operations occur for various reasons, but opportunities such as those deriving from a Global Crisis must be analyzed outside the conventional aspects. The simple reason that a good asset is depreciated under the current circumstances can already be considered a good motivator. In a not-too-distant analogy, B3 presented a record number of individual investors in 2020, precisely because several of these investors believed that some assets traded on the stock exchange were “cheap” when the stock market reached 63,000 points. The entire acquisition process involves the discussion of Price and Value. In short, Value is a measure of the ability to generate value in the future, while Price is how much you pay for the asset. For a company to acquire another, it must see its Value and know if the Price is compatible. If the buying company has done a good study on the motivators that led it to buy another company, it is likely that those motivators have captured all the values of the acquisition. These values are less severely impacted in a momentary crisis such as the current one, however, the company's price will certainly be significantly reduced. As Warren Buffett said: “Price is what you pay, value is what you get.” This greater discrepancy between Price and Value, mainly due to the fall in Price, is the ideal time for companies with easy access to credit and/or capitalized to set the pace of M&A operations. Given the expected economic recovery in the second half of 2020, an increase in the number of M&A transactions is expected. Operations that have been postponed will naturally occur in the coming months and new opportunities will enter the radar. ARTICLE WRITTEN BY HENRIQUE PORTO — PARTNER OF FC PARTNERSGo to our site: http://www.fcpartners.com.br