Corporate Finance in Atlantic Canada

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

Archive for April 2013

Six ways to protect your leverage in a negotiation to sell your company

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http://www.inc.com/john-warrillow/negotiating-with-courage-six-ways-to-protect-your-leverage.html

Good article on Inc.com by John Warrillow.  I particularly like the paragraph:

“A savvy buyer will ask you how much you want for your business.  Never answer, hint or even allude to a number.  Doing so would instantly set a ceiling on the value of your company.  (Or, if your number is stratospheric, you could scare away a legitimate buyer.)  The buyer must always make the first offer.  Always.”

This is something we see sellers do all the time, i.e. state an asking price (whether realistic or not).  Those sellers lose much of their negotiating room from the outset.  A better position:  use an M&A advisor to bring multiple potential purchasers to the table and let them present offers … that way, the market of potential purchasers will tell you the value of your business.  You have to recognize that some prospective purchasers don’t like this (see John’s comment about proprietary deals), but that doesn’t necessarily mean sellers shouldn’t do it (and if the business is a strong enough opportunity, the purchasers will recognize they may be missing out if they don’t make an offer).

Written by Dan Jennings

April 25, 2013 at 7:03 pm

Posted in CF Musings

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Private business owners – most of the statistics may not be in your favour

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http://www.divestopedia.com/2/1206/pre-sale/deciding-to-sell/stats-show-entrepreneurs-great-wealth-builders-but-awful-at-monetization

Check out this US article that has a collection of interesting stats drawn from a number of sources … some of these are ‘scary’ for entrepreneurs thinking about the eventual exit process.

“A typical business owner misjudges the value of a company by 59%.”  (2013 survey of M&A professionals)
“The primary reason for deal termination is seller’s unrealistic value expectations.”  (2012 survey of international business brokers) 

The moral of this story … do some advance planning for your eventual exit from your business, including understanding how the market will price your business!

Written by Dan Jennings

April 19, 2013 at 7:15 pm

Creating a business that can thrive without you

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http://www.huffingtonpost.com/jack-garson/how-to-sell-a-business_b_2970700.html

The above link is to an article on building a business that you can sell, such as the line:  “First and foremost, you need to build a business that can live — actually thrive — without you”

Readers of this blog will find this line very familiar, as I’ve written the same many times.

Along those lines, check out our webinar with John Warrillow on the themes from his book Built to Sell:  Creating a business that can thrive without you.  April 16 at noon Atlantic.  Register at the link below.

http://www.raymondyuill.ca/rywebinarseries.html

Written by Dan Jennings

April 14, 2013 at 9:52 pm

Halifax insurance broker deal

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http://thechronicleherald.ca/business/1122451-amherst-s-archway-acquires-snc-of-halifax

Amherst-based Archway Insurance announced it is acquiring SNC Insurance of Halifax.  The two independent insurance brokers have had a relationship for some time, but have now decided on a transaction.  Archway now has 9 locations in NS and NB.  Congrats to the Stack family on another successful deal!

Readers of this blog will recall that this is one of a long list of insurance broker transactions in the region.  A dramatically consolidating industry where strategic industry acquirers like Archway are competing for acquisitions with much larger strategic acquirers (such as insurers or insurer-owned brokers).

Written by Dan Jennings

April 9, 2013 at 8:47 pm

B.C. businessman hunting for investments in Newfoundland

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http://www.nl.dailybusinessbuzz.ca/Provincial-News/2013-04-04/article-3213352/NL%3A-B.C.-businessman-hunting-for-investments-in-Newfoundland/1

While it’s not common to see BC private equity looking at opportunities in Atlantic Canada, this article shows that it does happen (and perhaps increasingly in NL’s hot economy).

This is also further confirmation of the billions of dollars in capital available, and how the private equity firms investing that capital can’t find enough good opportunities in private companies in which to place it, so they look further afield.

Written by Dan Jennings

April 7, 2013 at 1:05 pm

How long it could take to sell your company

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http://www.inc.com/john-warrillow/4-steps-to-finding-your-sell-by-date.html 

Article from John Warrillow on Inc.com about how long it could take to sell your business.

Written by Dan Jennings

April 3, 2013 at 3:50 pm