Business growth: strategic processes for structuring the company’s new steps

EXPERT OPINION

Business growth: strategic processes for structuring the company's new steps


Business growth stage involves planning strategies and solutions that will support this important step


By Luciana Uchôa


The opening of the natural gas market, divestments in the oil sector, biddings in the energy market, the announcements of privatization, among others, are attracting foreign attention to Brazil, putting the country back again on flows of international funds.

In 2019, Brazil ranked fourth among the world's main foreign investment targets, according to the Global Investment Trend Monitor of the United Nations Conference on Trade and Development (UNCTAD).

In 2020, due to the pandemic and its effects, Brazil dropped to the 11th position in the ranking. It is worth mentioning, however, that this reduction was recorded all over the world, with Foreign Direct Investment suffering a global drop of 35%.

Investors who wish to settle here, must consider careful planning, besides taking into account all necessary steps before the opening stage. This process must be supported by strategic partners in the financial, accounting, tax, and legal fields.

The environment of new market opportunities brings the expectation of advances, specially through recent measures, such as the Provisional Measure of economic liberty, the legal framework for basic sanitation, the bankruptcy act, and the legal framework for startups. At the same time, businesses that are already established and wish to grow amid this scenario are also getting confident to take bigger steps.


Business growth: what to consider


In order to seek business growth or expansion, even in a consolidated business, it is necessary to consider whether you are ready for this process.

It is essential to understand the actual situation of your company, its position in the market, its strengths and weaknesses and the trend in the market it operates in.

Besides evaluating if it is time for a new investment, this move only makes sense if it contributes to reaching the desired levels of profitability, which will be indicated by a complete investment planning.

The goal must be clear, as it will guide future actions. The specificities of each business must be considered.

At this stage, relying on specialized support to assess financial viability, the involved costs, and search for financing sources is also essential.


Paths towards business growth


Business growth is not necessarily related directly to the acquisition of a new company, to the increase in size or in the number of employees. Expansion can be associated with diversifying products and services, opening branches, conquering new markets, raising funds, among other strategies.

Check below some processes and solutions that may be implemented to support a business in its development plans:


Tax planning


A company's tax performance has the potential to open paths for new opportunities. Therefore, it also important to review tax planning, in order to understand if the company is making the choices that brings it closer to its goals and increase its competitiveness.

This includes analyzing all taxes payable by the business, the tax system, the profit margin and estimated revenue. This survey will indicate which are the correct choices and/or whether it is necessary to change routes.


Mergers and acquisitions (M&A)


In June 2021, the merger and acquisition Brazilian market recorded a growth of 113.7% in relation to the same month in the previous year (Source: Mergers and Acquisitions Portal). In addition, M&A activity this year is expected to have a growth of approximately 25%.

Mergers and acquisitions, of course, are only carried out after evaluating the risks of these new businesses. These operations must be preceded by a due diligence process, which presents a precise and needed diagnosis to acquiring companies.


IPO - Initial Public Offering


Going public is an increasingly considered solution among businesses planning to achieve new growth levels. This is one more resource a company may use to support its development plans.

When starting an IPO, the company must be complying with a variety of legal and regulatory requirements, including the ones required by the Securities and Exchange Commission (Comissão de Valores Mobiliários - CVM)

Thus, the preparatory stage for an IPO includes many steps, and an organization must have support from different experts to help it in internal and analysis.

Read also: The time and turn for IPOs: how to prepare the company for public offerings.


Tax compliance


To explore growth opportunities, whether it be through biddings, actions or going public processes, a company must prove its tax compliance and integrity. This means the business must comply with federal, state, and municipal tax legislation and social security.

Attesting tax compliance reduces operational risks and acting to ensure this compliance makes the company ready for expansion.

Read also: Non-Overdue Liability Certificates: Why keeping them up-to-date?


Support to growing businesses


Domingues e Pinho Contadores has an extensive portfolio of accounting, tax, and paralegal solutions to support its clients.

DPC's team of experts is ready to advise enterprises in their growth journeys, developing tax planning activities and accounting, tax, labor, and social security due diligence, in addition to supporting M&A and IPO processes and actions aimed at tax compliance.



Author: Luciana Uchôa, partner at Domingues e Pinho Contadores.



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