To make it easier for you to read this article, we suggest downloading it in PDF Format.
Tell me a bit about your background and how you entered the world of SFs. How was your fundraising process?
Originally from the Dominican Republic, I am a civil engineer by training and the mother of a daughter. I began my international career in Latin America, primarily in the Dominican Republic, Panama, and Mexico, before arriving in Spain about 15 years ago to pursue a Master’s degree at the Polytechnic University. Throughout my professional career, I have held executive positions in operations and project management, later moving into the economic-financial area as a CFO assistant in companies backed by private equity funds, such as Dospuntos (a real estate developer). This career path allowed me to develop strong management skills and have an integrated business vision: technical training, project operations, and investments.
While doing a Master’s at IE, I discovered the world of SFs, and it was love at first sight. I liked this different approach to the business world, the possibility of acquiring a company to lead it, and I started at the end of 2019 to launch D’Ella Capital, the first female-led SF in Spain. This type of management attracted me, along with a much more human leadership style, given that my experience with private equity funds had not been entirely satisfactory, and I felt that personnel management was not being done well.
Raising money was very complicated. I had commitments from some investors who backed out a few months later with the arrival of COVID-19 due to the uncertainty of the moment. The prospecting process was long and tough. An investor even told me that he would support me as a searcher if I chose to search in the Dominican Republic, but not in Spain. Despite these difficulties, I was very clear about my desire to acquire a company, so I started the search process with my own resources. After six months, I was fortunate to convince an American family office, specifically the 200th investor I contacted, who backed me and persuaded me to set up the SF with him as the sole sponsor.
How was your search process, and how did you come across Grabalfa?
I started at the beginning of 2020 with my own resources and hired a couple of analysts from IE. It took a long time to set up the operational model, which allowed me to achieve a much higher response rate than average once the search process was launched. I was clear about my interest in industrial companies, so I used databases to analyze the accounts of potential target companies and an email generation software to contact the owners of these companies. All initial contacts were via email, and we analyzed about 120 companies in depth. I was very clear in my thesis that I wanted only proprietary deal flow, avoiding intermediaries that prevent you from approaching the owner.
Launching an SF is an unparalleled opportunity for your personal and professional development: each stage requires different skills, and the search process makes you a blend of resilience and patience. We were in a very advanced stage with a deal in the mechanized industry sector in the Basque Country, and we even started due diligence, but it ultimately fell through. My single sponsor understood the reasons and continued to fully trust my criteria. I was lucky to know, from sharing experiences with previous searchers, that until the deal is closed, it can fall apart at any moment. Although we advanced with the due diligence of this company, I never stopped searching, so recovering from this failed process was quick. We found Grabalfa, a company in the field of prepress and graphic chain management. The owner was about 80 years old and had a couple of children who did not want to take over the business, making it an ideal situation for an SF. He responded directly to my email and opened the doors of his company to us. He had other approaches from industrial companies and even SFs, but the process with me was very close, and in the end, I convinced him that I was the ideal person to continue his legacy. The fact that he gave me access to his company and his team from the beginning was crucial because it allowed me to get to know the company in depth, and I am very grateful to him for choosing me as his successor.
What attracted you, and how was your arrival at the company?
As I mentioned, I was fortunate to enter the company from the start, which allowed me to collaborate with the entire team from day one while we conducted the due diligence and contract processes. So, during the six months between the LOI and the actual purchase, I worked closely with the team, discovering the company’s strengths and the challenges I would face. I met with all the employees one by one to see if there were any hidden talents and to get to know the company in depth, which allowed me to implement my future vision plan for the company from day one after the purchase.
The choice of the packaging sector was not random. It is a crucial sector with a significant impact on our economy and, at the same time, with great potential for technological development and professionalization. The company had about 50 years of history, making it a very mature and sector-leading company. However, as you can imagine, the management by an 80-year-old person was very personal, so I detected that there was immense room for improvement both in business terms and in the management and potential of the team. Grabalfa had about 120 professionals and, in terms of economic data, was generating around €12M in revenue when we bought it, with an EBITDA of approximately €1.8M.
Is this what you define as Grabalfa 2.0? How has the management been with your push?
I was clear that the company needed a radical change, and from day one, I was involved in changing the vision from being merely a supplier -projects were often treated as orders- to providing a service throughout the packaging chain, coordinating from the initial design conception to the delivery of the product. I involved the entire team in this process and developed the philosophy of entrepreneurship and learning from mistakes. I realized that many executives had not been allowed to innovate in their positions and take on challenges, so I created a leadership style that encouraged them to dare and step out of their comfort zone. The idea was to maintain the core business and launch new product lines. We even launched an R&D department, which now has a team of five professionals to anticipate industry changes. We created an environment that fosters creativity and excellence, which is directly reflected in the quality and innovation of our services.
We have grown significantly, both organically and through acquisitions, because I found a very fragmented sector full of small companies and decided to start a consolidation process. In the last two years, we have acquired two small companies, one in Seville (Euroflexo) and another in Vigo (Flexgal), making us the only prepress company in Spain that offers nationwide coverage, with production delegations throughout the territory (Madrid, Barcelona, Valencia, Sevilla y Vigo). Both acquisitions were made solely using the cash flow generated in recent years. Now the company has 170 employees, and this year we should surpass €18M in revenue and achieve an EBITDA of €3.3M, double what it was when we bought the company in October 2021. We are leveraging these 50 years of history to become the undisputed leader in the Iberian Peninsula, working with retail brands like Mercadona and Lidl, adding value throughout the chain, and integrating sustainable practices.
One of the premises of the SF sector is usually “don’t make changes in the first year.” You are an example of the opposite. What advice would you give to other searchers?
Yes, the saying “don’t come in like a bull in a china shop” is one of the most repeated messages by traditional SF investors and about continuing the business. Personally, I strongly disagree with these statements. There will be changes, and it is important to plan them from the beginning and communicate your vision with the team to ensure everyone is aligned with the new plan. A searcher must be clear from the start about their vision, what they want to contribute, and what kind of leader they want to become. This also applies to the process of searching for the ideal target company. You have to step out of your comfort zone, not just look in your region of residence, or wait for a broker to bring you a deal. The great advantage of proprietary deal flow is that you will have the opportunity to get to know the company in detail during the negotiation and due diligence phase, which significantly speeds up your landing in the company.
It is true that you have to ensure business continuity, but you have to see beyond and dare. You need to set red lines from the beginning. When I buy a company (and this process involves three), I always acquire 100% of the capital and I try to avoid transition periods because I negotiate directly with them for months, but the day the purchase is signed, my management begins. If not, they don’t let you act, and you always have this “backing” or someone to blame. I like to dive into the deep end from the first minute because that forces you to accelerate and make your decisions from the start.
It is true that having a single sponsor makes it easier for me to advance in managing the company (a board easier to manage), but it also has its risks because if you clash with him, you can disappear from the map. I see many new searchers having difficulties raising the necessary funds to get started, but I think they are making mistakes. If the project is good, they will always find investors. I try to encourage them to start the search process from day one and have a lot of patience and resilience. It doesn’t matter if you only have 40-50% of your cap table covered; you’ll see how you attract others if you start showing some potential deals.
As a final piece of advice, I would recommend reading “The Motive” by Patrick Lencioni. This insightful book helps leaders understand the fundamental reasons behind why they lead, emphasizing the importance of recognizing one’s true motivations. By clarifying these motivations, future leaders can make more informed decisions about their leadership style and priorities. Understanding why you want to lead will also guide you in defining the type of company you want to acquire and the kind of people you wish to have by your side on this journey. It’s crucial to be clear about your intentions and goals from the outset to build a successful and aligned leadership team.
Additionally, it’s essential to surround yourself with a competent and trustworthy Chief Operating Officer (COO). Having a strong COO allows you, as the CEO, to focus on the most critical tasks and strategic thinking for the long-term success of the company. This partnership ensures that the day-to-day operations are managed effectively, giving you the bandwidth to lead the company toward its vision and goals.
