Inaction has a cost that is rarely calculated. Companies that postpone critical decisions — succession, investment, restructuring — pay a high price for waiting.
There is a cognitive bias studied in business schools but practised massively in the Spanish middle market: status quo bias. The tendency to do nothing, to keep things as they are, under the illusion that not acting means not taking risk.
The reality is that not acting is a decision. And like every decision, it has consequences.
A food distribution entrepreneur. Founded his company in 1985. In 2015, at 65, we began discussing succession. Three children, none interested in the business. The company was turning over 35 million with 3.5 million EBITDA. It was in good shape. Buyers were interested.
“I’ve still got plenty of life in me,” he said. “Let’s talk in a couple of years.” Those couple of years became five. The pandemic hit. EBITDA fell to 1.5 million. Buyers disappeared. He finally sold in 2021 at a multiple significantly lower than he would have achieved in 2015. The price difference exceeded two million euros.
A manufacturing company identified the need for production line automation in 2017. Investment: 1.2 million euros. Estimated payback: three years. The founder deferred it. By 2019, competitors who had invested were offering prices 15% lower. The company started losing clients. When it finally invested in 2020, the cost had risen to 1.8 million and the competitive context was far more adverse.
A services company began showing deterioration signals in 2018 — declining margins, tightening cash flow, two key middle managers leaving. The founder minimised the signals. When they finally called us in 2020, options were limited. A restructuring that would have been straightforward in 2018 became major surgery in 2020.
The reasons are understandable and deeply human: loss aversion (preferring known pain to unknown pain), unfounded optimism (“next year will be better”), pride (recognising need for external help can feel like admitting failure), and perceived complexity (“selling a business is too complicated”).
Put a number on the cost of inaction. If your company loses 3% competitiveness annually from underinvestment in technology, in five years that is 15% of market position lost.
Seek external perspective. An outside advisor can tell you what you do not want to hear.
Set a deadline. “Before 30 June I will have made a decision about succession.” Artificial deadlines create urgency where inertia produces paralysis.
Start small. You do not have to make the big decision tomorrow. But you can take the first step: a call to an adviser, a meeting with an investor. The first step breaks inertia.
Inaction is not prudence. It is making decisions by default instead of by design. And default decisions are rarely the best ones.
Dirk Manuel Martens Jimenez Founder, Blue Mountain Capital
Founder of Blue Mountain
Over 15 years investing in Spanish companies with patient capital. Expert in business succession, corporate governance, and middle-market investment.
By Blue Mountain Capital
By Dirk Manuel Martens Jiménez
By Dirk Manuel Martens Jiménez
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