Analyse and defend your competitive advantage: key to maximising value when selling your company

When the time comes to consider selling a company, many founders and executives immediately think about figures: turnover, EBITDA, valuation multiples... However, there is one aspect that often makes the difference in terms of investor interest and willingness: the competitive advantage.

Understanding it, analysing it in depth and, above all, knowing how to defend it to third parties is one of the factors that can most influence the success of a sale or purchase transaction. In fact, even outside of an M&A process, analysing competitive positioning adds enormous value to the strategic management of any company.

In this article, we explain why it is so important for investors, what the best practices are for analysing the sector and competition, and what direct benefits you will gain from working on this aspect systematically.

¿Why is competitive advantage so important to investors?

The investors' business is based on a fundamental principle: maximize expected return while minimizing risk.
This means that when analyzing a company, they will not only evaluate its current financial results, but also:

• The appeal of the industry: size, growth capacity, average profitability, degree of fragmentation or concentration, ease of scaling, and barriers to entry for new competitors.
• Positioning within the sector: what sets your company apart from the competition, how sustainable that difference is in the long term, and what external risks (regulatory, technological, market) could affect it.

Ultimately, the more solid and defensible your competitive advantage is, the lower the perceived risk will be and the greater the investor's willingness to pay a higher price for your company.

How to analyze the industry and your competitive position

When preparing a sale, it is advisable to conduct a two-pronged analysis: on the one hand, the sector environment and, on the other, direct and indirect competition.

1. Analyze the attractiveness of your sector

An investor will want to understand whether your sector offers opportunities for future growth. To do this, it is advisable to work on:

• Industry size: total volume, historical growth, and projections.
• Scalability: possibility of growth while maintaining cost structures and margins.
• Barriers to entry: regulatory, technological, capital, or specialized knowledge.
• Macroeconomic trends: factors that may drive or limit the sector's development.
• Investor sentiment: increasingly accessible through advanced analytics or AI, which allows us to identify where capital interest is heading.

2. Get to know your competition inside out

The most common mistake is to focus solely on the “usual” competitors: similar companies offering the same product or service. However, it is worth broadening your horizons to include:

• Substitutes: alternative solutions that can solve the same problem for the customer.
• Internal competitionIn some sectors, “do-it-yourself” by the customer is a real threat.
• New entrants and startups: companies that are not yet relevant in terms of market share, but that could alter the competitive dynamic.
• Complementary competitors: companies that, with a strategic shift, could become direct competitors.

Once identified, it is essential to monitor their movements: prices, marketing policies, commercial strategy, strategic alliances, etc.

Best practices for building a robust analysis

In our experience advising on sales processes, there are a number of practical recommendations that help structure a competitive analysis that is useful both on a day-to-day basis and at the time of sale:

Listen to your customers
The best source of information is often the most direct one. In B2B businesses, every commercial interaction is an opportunity to gather feedback on why customers choose your solution over others. In B2C businesses, surveys, online behaviour analysis and digital campaign data are key to understanding perceived value.

Rely on external sources
There are an increasing number of databases and tools that enable sectors to be analysed, prices to be monitored, trends to be detected and competitors' movements to be assessed.

Make analysis a continuous process
This is not a one-off exercise prior to the sale, but rather a competitive intelligence system that informs management in strategic and tactical decision-making.

Work with experts
Having an external team specialised in your sector provides objectivity, depth and comparative insight compared to other M&A processes.

Benefits of a well-structured competitive analysis

The effort to analyse and defend your competitive advantage generates clear results whether you are in a sales process or not.

The competitive advantage in an M&A process

• Maximise the transaction price by reducing the risk perceived by investors.
• It facilitates the identification of potential buyers by providing a better understanding of what they are seeking in the sector.
• Improve your bargaining power by having solid arguments about your position in the market.
• It conveys confidence and professionalism: a company that presents clear, well-structured information is perceived as more attractive.
• Reduce unforeseen events during the transaction, avoiding misunderstandings and making the process smoother.

The competitive advantage outside of a sales process

• Identifying market opportunities, inspiring new lines of business.
• Improvement of competitive positioning, reinforcing differentiation.
• More robust strategic planning, anticipating risks and challenges.
• Internal alignment, as management and the board share a common framework for sector analysis.

When should competitive advantage be analyzed?

Analysing and defending your competitive advantage is not just an academic exercise, but a practical management tool and, when the time comes, a differentiating factor for maximising the value of your company when it is sold.

The key is to make this analysis a continuous process, fuelled by customer feedback, observation of the competition and expert support. This way, you will not only be ready for a potential M&A process, but you will also improve the strategic management of your business on a day-to-day basis.

Our M&A experts in the technology sector recently held a webinar where they explored best practices for analysing the sector in which you operate and how to defend your competitive advantage against competitors. They also offered practical recommendations based on their experience for aligning business strategy and optimising customer offerings. You can watch the full webinar below.