Corporate Finance in Atlantic Canada

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

Archive for August 2012

Umbian sells

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http://investor.resmed.com/phoenix.zhtml?c=70291&p=irol-newsArticle&id=1724460

Another local software firm has sold to a California acquirer — Umbian to ResMed.

Halifax’s Umbian has developed software that monitors sleep apnea and ensures compliance/reporting, while ResMed of San Diego (NYSE:  RSM) is a developer, manufacturer and distributor of medical equipment for treating, diagnosing, and managing sleep-disordered breathing and other respiratory disorders.

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Written by Dan Jennings

August 31, 2012 at 9:20 am

Posted in Announced Transactions

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Finance knowledge online

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http://www.financelearningacademy.com/financethis.html

If you’re looking for good online content on financing a business, check out this new course offering from Blair Cook’s Finance Learning Academy, a series of courses designed for the needs of CFOs.

Written by Dan Jennings

August 27, 2012 at 3:13 pm

Posted in CF Musings

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Tech entrepreneurs … to sell or not to sell?

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http://business.financialpost.com/2012/08/18/to-sell-or-not-to-sell-thats-the-tough-question-canadian-entrepreneurs-face/

Interesting article from the Financial Post on when technology start-ups should consider taking an exit via a sale to a large player, including some local perspective due to quotes from NB’s Gerry Pond (Radian6) and NS’s Jevon MacDonald (GoInstant).

While it is the dream of most tech entrepreneurs to sell for millions, the article briefly touches on one of the challenges … access to capital.  Growing an early stage tech company takes a large amount of capital (funding in the earliest stages and then working capital when revenue is growing leaps & bounds), and many entrepreneurs find it difficult to source that capital and still not dilute themselves completely.

What the above article doesn’t touch on is the reality that plenty of early stage companies have rejected buyout offers, only to fail later when they run out of capital and/or hit some other hurdle to growth and success.  Just goes to show that the question of ‘when to sell or not to sell’ is not an easy one … timing is everything!

Written by Dan Jennings

August 20, 2012 at 9:15 am

Posted in CF Musings

The importance of EBITDA

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http://divestopedia.com/2/834/maximize-value/financial-metrics/the-top-10-ebitda-adjustments-to-make-before-putting-a-company-for-sale

This link is a good article on how EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization) has become critically important when someone is considering buying your business.  It’s not the only factor but it is certainly important.

Even in small businesses, EBITDA has become a proxy for operating cash flow (or sometimes, at least the starting point for determining cash flow), and multiples of EBITDA have become increasingly important as a valuation rule of thumb.  However, in my view, it has become too much of a focus because capital-intensive businesses can/do trade at different multiples of EBITDA because cash flow cannot be easily assumed from EBITDA.

Interesting aside … a peer at another firm once told the story of how she was testifying as an expert witness, and after several hours, the judge asked her what the B stood for in EBITDA … her heart sank as she realized she had not been getting through to the judge at all on the essence of her analysis!

Written by Dan Jennings

August 16, 2012 at 10:33 am

Posted in CF Musings

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Buying a business? Check out the new section of our website

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www.raymondyuill.ca/buying.html

Check out the new ‘Buying a Business’ section of our website … plenty of information to consider if you’re considering a business acquisition.

Written by Dan Jennings

August 3, 2012 at 10:05 am

Posted in CF Musings

Drug developer NeuroQuest sells

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http://thechronicleherald.ca/business/122584-drug-developer-neuroquest-bought-by-pei-firm

Halifax-based NeuroQuest has been acquired by Neurodyn, based in PEI.  NeuroQuest is developing treatments for neuropathic pain, while Neurodyn is focused on treating neurological diseases.

Written by Dan Jennings

August 2, 2012 at 10:15 am

Posted in Announced Transactions

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