rbce brazilian market entry strategies
DESCRIPTION
4 key points when designing your strategy to enter the Brazilian market, Brazilian market entry strategy, UKTI Mission to Brazil, RBCE (Ricardo Belotti Consultoria Empresarial)TRANSCRIPT
October 2013
BRAZILIAN MARKET ENTRY STRATEGIES
M&A | Strategy Consulting | Ventures
helping CEOs and their teams achieve a winning performance and develop their businesses!
16YEARS
SELECTED CLIENTS
Healthcare Products and Services Distribution NASDAQ: HSIC
Brazilian Market Entry Strategy
PharmaceuticalsChina
Brazilian Market Entry Strategic Partnership
BeveragesCanada
Brazilian Distribution Strategy Advisory
BeveragesUnited Kingdom
Brazilian Distribution Strategy Advisory
clients sector / country projects type
SELECTED INTERNATIONAL CLIENTS
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WHAT TO CONSIDER WHEN DESIGNING YOUR STRATEGY
Brazil’s Diversity and Size
Cost of Doing Business and Informality
Taxation
M&A Challenges
5
Hig
her
Ris
k
Hig
her
Retu
rns
Hig
her F
lexib
ilityMARKET ENTRY MODES
Greenfield
Acquisition
Majority JVs
50/50
Minority JVs
Licensing / Franchising
Distributor / Agent
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Diversity
7
COST OF DOING BUSINESS
2013 Other Latin
AmericaOECD China Brazil
Procedures to start a business, number 9 5 13 13
Time to start a business, days 53 12 33 119
Time to pay taxes, hours per year 367 176 338 2,600
Cost to export* 1,268 1,028 580 2,215
Cost to import* 1,612 1,080 615 2,275
Time to resolves insolvency, years 3.1 1.7 1.7 4.0* In $ per containerSource: World Bank
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INFORMALITY
Examples– Tax Evasion: Retail / Distribution– Bribes: Orthopedic Implants– Cartel: Infrastructure
Some Progress– Electronic tax transaction records
making it harder to avoid taxes
CRITICAL FOR BUSINESS
MODEL AND STRATEGY
CONSIDERATIONS
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WHY M&A DEALS FAIL IN BRAZIL
Adapted from multiple sources
MAIN DUE DILLIGENCE ISSUES NORMALLY IDENTIFIED
Material tax, environmental and labor risks and contingencies
Informality in the operations (e.g. unrecorded transactions, owner: “the
company is 95% clean”)
Owners personal interests included in the company’s interests (and vice-
versa)
“Outsourced” or unregistered employees
Inadequate accounting practices controls and reconciliations =
triggering significant accounting adjustments and tax risks
Inadequate cash management
MANY SOLUTIONS AVAILABLE TO ELIMINATE OR MITIGATE RISK
Escrow
Alternative Transaction Structures
Asset DealsDON’T UNDERESTIMATE
THE NEED TO DEEP DIVE INTO THESE
ISSUES
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IMPORTATION VSLOCAL MANUFACTURE
Started in Brazil in 1999Initially only importingPlan was to open 50 stores in 3 years
After 14 years has only 41 storesMixed local/imported linesPrices 11% to 90% higher than in EuropePositioned as a Premium Brand
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ENTRY STRATEGIES FOR BRAZIL:4 KEY POINTS
Understand regional differences and your target market Don’t underestimate
the cost and time of doing business in your
Business Plan
Taxation can make or break your business
model
Consider alternative structures to make your M&A deals work
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Business Developmen
tStepping inEntry
Planning
Market ScreeningEntry Strategy
Planning
Acquisition,Joint Venture,
Strategic PartnershipTransaction
Advisory
Post-Merger Integration (PMO)
Investment Monitoring
Greenfield Project Planning and
Execution Advisory
PartnershipBusiness
Development Advisory
WHERE WE CAN HELP
DRAFT FOR DISCUSSION 13
M&A | Strategy Consulting | Ventures
OUR TEAM
Ricardo BelottiPartner
Phone: + 55 11 99981-2947
E-mail: [email protected]
Curriculum Vitae• Partner and Founder at RBCE
since 1997.
• Has 33 years of corporate finance and, M&A, Private Equity, asset management, privatization processes and project finance.
• Has an MBA degree by INSEAD with specialization in negotiation at Stanford and bachelor degree in Business Administration at Fundação Getulio Vargas.
Experience in Transactions
Previously to opening his own consulting boutique, Ricardo was a partner at Brasilpar, one of the first private equity firms in Brazil. In his projects, he had the opportunity to advise over 100 transactions for clients such as:
• CSN
• Masa Vetco
• Petrom – Petroquimica Mogi das Cruzes
• Redetrel
• Bunge
• Henry Schein
• Among Others
DRAFT FOR DISCUSSION 14
M&A | Strategy Consulting | Ventures
OUR TEAM
Pedro BelottiPartner
Phone: + 55 11 99850-6000
E-mail: [email protected]
Curriculum Vitae• Partner at RBCE since June 2013.
• Has 11 years of professional experience in the health care industry doing Global Business Development.
• His last position was Director of International Business Operations, responsible for strategy management and M&A coordination for International Dental Group, also a member of the corporate strategic planning team.
• Has a Masters in Finance degree at London Business School with specializations at GVLaw and Harvard Law School
Experience in Transactions
Pedro Belotti has a solid experience in finance and management, working in several successful projects such as:
• market entry and business development in Brazil,
• acquisition of family owned businesses across the globe,
• post-merger integration of companies in Italy and England,
• sales force restructurings and commission plan changes,
• implementation of balanced scorecards,
• implementation of business intelligence systems.
• Previously, Pedro was European Marketing Manager and before that Financial Planning, Analysis and Treasury Supervisor.
DRAFT FOR DISCUSSION 15
M&A | Strategy Consulting | Ventures
OUR TEAM
João BelottiPartner
Phone: + 55 11 99222-1342
E-mail: [email protected]
Curriculum Vitae• Partner at RBCE since Nov 2011.
• Has 8 years of professional experience in the fields of financial modeling, valuation, mergers and acquisitions, corporate finance and restructuring.
• Previously, has worked for 2 years at Ernst & Young Transaction and Advisory Services, where participated in more than 50 valuation projects.
• Has a bachelor degree in Economics at the University of São Paulo and specialization in recovery and turnaround management at Insper.
Experience in Transactions
Joao has experience in various sectors and participated in the coordination of valuation projects, restructuring, M&A, data gathering, operational and strategic analysis. In his projects, he had the opportunity to advise clients such as:
• Petrom – Petroquimica Mogi das Cruzes
• Wellstream
• Redetrel
• Grant’s
• General Electric
• Thyssen Krupp
• Among Others
DRAFT FOR DISCUSSION 16
M&A | Strategy Consulting | Ventures
OUR TEAM
Rafael MastrocolaPartner
Phone: + 55 11 96037-1324
E-mail: [email protected]
Curriculum Vitae• Partner at RBCE since Mar 2013.
• Has 8 years of professional experience in the fields of equity capital markets, banking and asset management.
• Previously, has worked for 3 years at Banco Santander, where participated in most of the Initial Public Offerings during Bovespa’s IPO boom years (2006-2011).
• Has a bachelor degree in Economics at Ibmec-SP and specialization in M&A at Insper.
Experience in Transactions
Rafael previously has worked for Citygroup, Merrill Lynch and Santander as Equity Research Sales, where he gained experience in various sectors and participated in more than 20 Initial Public Offerings and Follow – Ons.
He also worked for a short period of time as Manager of Investor Relations at Principia Capital Management, a local hedge fund focused on quantitative investing. Has experience with many of the methods of business valuation and strategic analysis
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THANK YOU!