DJ DEALMAKERS: Spaniards Pounce On Small-Business Niche.
By Jonathan House
Of DOW JONES NEWSWIRES

MADRID (Dow Jones)--Owners of small businesses tend to be set in their ways and wary of outside advice.

Which presents a challenge to Elena Rasero and Cecilia de la Hoz, co-founders of e-Valora Financial Services SL, an advisory firm that targets small-time CEOs.

"The typical person we deal with is a self-made man who is used to doing things
his own way," Rasero says.

Rasero and de la Hoz, childhood friends and former investment bankers, are trying to pounce on an overlooked market: thousands of small businessmen in Spain who
are typically brushed aside by major financial institutions looking for big
clients.

Madrid-based E-valora looks a bit like a dot-com at first blush. For EUR1,000, a
user fills out a form on the firm's website, inputting detailed information about
company sales, finances and management. Next, Rasero and de la Hoz fine-tune the report, adding a financial outlook for the customer's industry and
reviewing the market value that's been assigned to the customer's firm.

Rasero and de la Hoz hope these fledgling, web-based relationships will generate
more-lucrative corporate finance deals from Spain's small businesses, including
mandates to broker mergers and acquisitions.

"Small companies can't pay the fees of the large investment banks...The Internet is a low-cost medium that provides us with a channel to reach this market," says Rasero.

Rasero and de la Hoz were both 28 years old when they left jobs with big
investment banks and struck out on their own.

It was quite a gamble. Rasero was assistant director for corporate finance at UBS AG (Z.UBS) in Madrid and de la Hoz was manager of corporate banking accounts at Banesto, unit of Santander Central Hispano SA (STD). The women, friends since age 15, liked their jobs and had good prospects for advancement. De La Hoz was four months pregnant.

"But we were afraid somebody else would beat us to it and take this business ...
We couldn't wait," says de la Hoz. They started e-Valora at the end of 2000 with an initial investment of EUR145,000 from their own savings and "a small round of friends and family."

e-Valora rolled out its online valuation service earlier this year. It has four employees and is aiming for 2002 revenues in the range of EUR300,000 to EUR400,000, with a "slight net profit," says de la Hoz.

The company is putting the finishing touches on another Internet-based service -
a sort of dating agency for people looking to buy or sell companies.

Beyond that, says de la Hoz, "we see the potential to sell additional services to most of our online valuation customers."

Javier Gonzalez, controller of IdecNet SA, an Internet service provider in the Canary Islands, used e-Valora after rejecting what he felt was a vastly inflated
valuation from another consultant.

He's now using his E-valora report to attract new investors to IdecNet, which has EUR3.5 million in annual sales, so it can expand its high-speed ADSL service.

Rasero and de la Hoz are using relationships from their days at UBS and Banesto
to promote E-valora and attract new customers.

A couple of months ago, they sent promotional materials to their contacts in Spanish corporate-finance circles - among them, Santiago Eguidazu, head of Nmas1SA, an investment bank that advises medium-size companies. He's now exploring "collaboration possibilities" with e-Valora.

Working with small businesses (typically with around EUR3 million in yearly sales) is quite a change for the ex- investment bankers. For one thing, they usually deal directly with the business owner.

One customer told Rasero and de la Hoz precisely what valuation he wanted them to assign to his company. Since he was paying for their services, the customer told them, he should get the valuation he wanted.

"We said we couldn't do that, we'd be jeopardizing our reputations... We explained to him that he was paying us to give him an independent assessment of the value of his company," Rasero says.

Another small business owner asked e-Valora to negotiate a deal to acquire another company for a small cash payment and the promise of a percentage of future profits. When Rasero and de la Hoz told him they didn't think the offer would be accepted, Rasero says the man responded: "But they should be happy to have me buy them... Their company's such a mess!"

Once they've won the trust of the small business owner, Rasero and de la Hoz say, he tends to surrender more and more of his financial needs to e-Valora.

Surprisingly, Rasero says she and de la Hoz sometimes benefit from the fact that they're female.

"We've had clients say to us, "We prefer that you negotiate for us... Women are much tougher," says Rasero, laughing.