Corporate Finance in Atlantic Canada

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

Archive for March 2011

Radian6 sold to Salesforce.com

leave a comment »

http://online.wsj.com/article/BT-CO-20110330-711430.html 

Fredericton’s Radian6, a social media monitoring software firm, has announced a deal to sell to Salesforce.com for $326 million in cash & stock.  According to the Wall St Journal, Radian6 was founded in 2006 and has been doubling its revenue each year.

This sounds like a real home run for the founders and the venture capital backers!

Advertisements

Written by Dan Jennings

March 30, 2011 at 4:05 pm

More consolidation in the auto dealer industry

leave a comment »

http://www.cbc.ca/news/canada/nova-scotia/story/2011/03/28/ns-macphee-chevrolet-sold.html 

It was announced yesterday that long-time auto dealer Al MacPhee has sold his significant General Motors dealership in Dartmouth, NS to Steele Auto Group, leaving Steele and O’Regans as the remaining large players in the industry in the Halifax area.

While it came as a surprise to many in the industry that Mr. MacPhee would sell his landmark GM dealership, consolidation of car dealers is not surprising.  The competitive nature of the business, the manufacturers’ requirements for significant investment in new real estate and the trend towards clusters of different brands under single ownership (to share overheads) all point to consolidation, which has been happening throughout the industry in North America for years now.  Given these realities, dealers owning multiple dealership brands (like O’Regans and Steele in NS, Lounsbury in NB and Penney in NL) are now the norm rather than the exception.

Given the bounceback of car sales from the doldrums of 2008-09 (although some areas didn’t fare as bad as the North American sales trends, such as Halifax), I suspect Mr. MacPhee’s transaction won’t be the last one in 2011.

Written by Dan Jennings

March 29, 2011 at 1:20 pm

Don’t negotiate with one buyer at a time!

with 2 comments

One of the most common failings I see when entrepreneurs are selling their private businesses is … negotiating with only one prospective buyer at a time! 

For some small and mid-market entrepreneurs, they have never truly considered selling until one day a buyer appears at the door, and because it happens to be a good time to sell or perhaps because the buyer seems like a natural, well-financed fit to acquire the business, they enter into exclusive negotiations.  Now, this buyer may indeed be the most logical purchaser, and it may offer a fantastically high price … but how does the selling entrepreneur really know that he/she is getting the best possible price and terms??

I truly believe (and it is a fundamental tenet of our M&A sale process) that bringing other buyers to the negotiating table will result in a higher price and/or better terms.  I always tell entrepreneurs that it is not much different than when they are bidding on a contract — if you know you are the only one bidding, then you may offer a fair price, but if you know there are other legitimate bidders, then you are more likely to sharpen your pencil and offer a better price.  Ultimately, if a prospective purchaser of your business wants to acquire you, then pitting that buyer against other buyers will almost always yield a better offer. 

If nothing else, the seller will receive multiple offers from prospective purchasers and will have gained a great deal of comfort that the best possible price and terms has been achieved.

We achieve this multiple bidding environment for an entrepreneur’s business in a variety of ways, but they all involve negotiating with more than one buyer at the same time.  A quiet auction to a select group of purchasers is one way, but must always be measured against the need for utmost confidentiality.

But I’ll write at another time on how to maintain confidentiality in a sale process ….

Written by Dan Jennings

March 27, 2011 at 11:09 pm

Posted in CF Musings

Welcome

leave a comment »

Hi folks!

Welcome to my blog, Corporate Finance for Atlantic Private Companies.  This is my first attempt at blogging, so bear with me. 

I’ve chosen a topic that I’m passionate about and I plan on posting each week on a particular aspect that (I hope) will be relevant to you.  My posts should cover a variety of valuation, M&A and corporate finance matters that in my view should be of interest to those involved in small and mid-market private companies.

I suspect that if you’re reading this blog, then you are an entrepreneur, an advisor to entrepreneurs or perhaps you’re part of the management team of a private company.  Feel free to comment or question based on your experience, even if you have a differing view than my own.

Dan

Written by Dan Jennings

March 22, 2011 at 4:03 pm

Posted in Uncategorized