Corporate Finance in Atlantic Canada

Commentary on corporate finance issues for small- & mid-market private companies in Atlantic Canada

Different types of buyers

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In general, there are 3 groups/types of buyers for mid-market private businesses:

  1. Strategic.  Such buyers are often called industry buyers because they are typically in the same (or related) industry as the target.  These buyers tend to be larger companies seeking to consolidate your business with their existing operation, and so, they often have access to synergies from combining the two businesses.  These synergies can mean that such buyers can afford to pay more than the below types of buyers (i.e. they can pay a strategic premium over/above standalone financial value).  These buyers are often an option for mid-market businesses and less so for small businesses, but that can depend on the industry.
  2. Financial.  Financial buyers are aplenty in the Atlantic marketplace, given the prevalence of debt and equity capital.  These buyers have access to capital and either financial or management expertise, but aren’t currently operating in the industry of the target (and therefore don’t have synergies to allow them to pay the above premium price).  Such buyers range from formal private equity funds (such as the Sobeys/McCain-founded SeaFort Capital), to informal groups of owners seeking to invest in businesses and their management teams, to individuals who have a dream of being an owner (and have never acquired a business before).  In today’s market, there are many more financial buyers than business opportunities, and so these buyers/investors are looking in almost all industries and sizes in Atlantic.
  3. Management.  Existing employee or senior management groups have always been an option to acquire your business.  Historically, the challenge was often that such buyers didn’t have capital, and so often required significant vendor financing assistance.  In recent years, that is no longer the case, due to the availability of capital (both debt and equity) to assist management teams in acquiring the businesses they work for.  While management buyers can’t do the above strategic price, they can pay a fair price and therefore are a credible alternative.

Stay tuned for more blog entries on each type of buyer.

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Written by Dan Jennings

June 12, 2019 at 9:23 am

Cabco Communications sold

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https://www.thechronicleherald.ca/business/cabco-communications-sold-to-local-investors-307611/

The Chronicle Herald is reporting that Dartmouth, NS-based Cabco Communications Group has been sold to a group of local investors, led by Jim Mills (CEO of Halifax-based Office Interiors).  Cabco is a cabling & technology equipment sales, installation and service provider.

This is another example of the type of financial buyer I have spoken/written about many times.  In many sectors, private equity (or informal private equity in the form of a group of investors, in this case) has become a strong & credible alternative to ‘traditional’ industry/strategic acquirers.

Congratulations to majority owner Craig Meredith on his succession and exit!

Written by Dan Jennings

May 2, 2019 at 8:42 am

More insurance broker consolidation

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https://www.canadianunderwriter.ca/mergers-and-aqcuisitions/archway-insurance-moves-into-saint-john-with-acquisition-1004161431/

Various media have reported that Amherst, NS-based Archway Insurance has acquired Saint John, NB’s Hall & Fairweather Insurance.

This transaction forms part of the long list of consolidation in the P&C insurance broker sector, which has been written about here many times.

Written by Dan Jennings

April 28, 2019 at 2:54 pm

PEI’s CMP Acquired

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https://blog.cmpequipment.com/blog/fps-to-acquire-cmp

PEI’s Charlottetown Metal Products (CMP) is being acquired by BC-based Food Process Solutions (FPS).

FPS provides freezing and cooling equipment, while CMP is a designer/builder of custom food processing equipment.  According to the news release, FPS has big growth plans for CMP.

 

Written by Dan Jennings

February 12, 2019 at 8:57 am

Target Mazda acquired

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https://www.ngnews.ca/business/new-glasgow-mazda-dealership-asks-communitys-help-with-rename-255627/

The New Glasgow News is reporting that the NB-based Smith family has acquired New Glasgow, NS’s Target Mazda car dealership.

The Smith family also own Mazda dealerships in Dieppe, NB and Truro, NS, while Target Mazda claims to be the oldest Mazda dealership in Atlantic Canada.

This is another in a long series of transactions in the consolidating auto dealer industry, which has been commented on in this blog many times.

Written by Dan Jennings

December 7, 2018 at 1:20 pm

Conquest Engineering acquired

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https://www.thechronicleherald.ca/business/cbcl-acquires-conquest-engineering-265070/

The Chronicle Herald is reporting that Halifax-based CBCL Ltd has acquired Conquest Engineering Ltd of Saint John, NB.  As is common with many engineering firms, both are said to be employee-owned.

This continues the consolidation trend in the engineering industry.

Written by Dan Jennings

December 4, 2018 at 11:41 am

Welaptega sells to Ashtead

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https://www.ashtead-technology.com/news-events/ashtead-technology-acquires-welaptega/

Scotland-based Ashtead Technology has announced its acquisition of Halifax’s Welaptega (owned by Tony Hall).  Welaptega does inspections of offshore moorings, while Ashtead is a subsea equipment and services provider.

Written by Dan Jennings

November 28, 2018 at 5:17 pm