Corporate Finance in Atlantic Canada

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

Archive for May 2013

Another engineering firm deal

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http://www.newswire.ca/en/story/1174729/mcw-group-of-companies-completes-acquisition-of-r-e-leblanc-consultants

Moncton’s R.E. Leblanc Consultants has joined the MCW Group of Companies, based in Vancouver (but with a sizable Maritimes presence).

Another in a long line of consolidation deals in the engineering industry.

Written by Dan Jennings

May 31, 2013 at 11:47 am

Are You A ‘Sell Out’ If You Sell Your Business?

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http://www.spiritwest.com/are-you-a-sell-out-if-you-sell-your-business/

Interesting blog post.   This quote in particular is very true and we regularly encounter this phenomenon — entrepreneurs don’t want to talk about what happens when they will retire:

Business owners almost recoil when they hear the words “Exit”, “Succession Planning”, or questions like “When are you going to sell?”

“What I want for this business is probably more than anyone is going to give me.”

All true perhaps, but we all need to plan for the eventuality of retirement (or otherwise leaving the business, whether we like it or not).

Written by Dan Jennings

May 31, 2013 at 8:26 am

EBITDA multiples are only part of the story

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http://www.inc.com/david-lonsdale/three-pillars-of-valuation.html

Good article on Inc.com on why EBITDA multiples are not the only consideration in business valuation.

See my earlier post on a similar topic about EBITDA multiples:  https://smallbusinesscf.wordpress.com/?s=EBITDA

The following quote from Inc.com is also a theme of my blog — you need competitive tension among prospective buyers to ensure you get the best possible price and terms for your business, and that multiple prospective purchasers will prove to you that you are receiving ‘true’ market value.

“Finally, when it does come time to sell, make sure that you market the company to a large number of qualified buyers, so that the competition in the marketplace will drive your company’s value to a peak.”

Written by Dan Jennings

May 28, 2013 at 8:48 am

A vendor says: “3 things I wish I’d known about selling a business”

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http://www.theglobeandmail.com/report-on-business/small-business/sb-money/valuation/3-things-i-wish-id-known-about-selling-a-business/article4199708/

Check out this article by John Warrillow on some advice for sellers.  I particularly like this paragraph:

“At some point in the process of selling your business, a prospective buyer will ask you, often casually, “Why do you want to sell your business?”  These eight seemingly innocuous words have derailed more deals than any other.  Obviously you don’t want to lie, but there is a right and a wrong way to answer the question.” 

Written by Dan Jennings

May 25, 2013 at 11:09 am

What Business Buyers Want

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http://www.inc.com/curtis-kroeker/what-business-buyers-want.html

Article from Inc.com on preparing your business for sale and making it ‘salable’.

Also consider checking out our online self-assessment tool, The Sellability Score:  http://www.raymondyuill.ca/sellabilityscore.html

Written by Dan Jennings

May 17, 2013 at 5:16 pm

Check out this article: “Did You Just Call My Baby Ugly?”

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http://www.inc.com/john-warrillow/did-you-just-call-my-baby-ugly.html

Interesting article in Inc magazine on the psychology and emotion of negotiating with a much larger buyer.  I like this line (but it may not be applicable when you’re selling to a local financial buyer):

“Selling a business is deeply personal.  Buying one is not.  Surviving the negotiation comes down to understanding the other side better than they understand you.”

Written by Dan Jennings

May 15, 2013 at 5:34 pm

Posted in CF Musings

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A business valuation as a planning tool for your firm

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http://www.profitguide.com/manage-grow/success-stories/the-appraisal-you-cant-afford-to-miss-49139

Good article from Profitguide.com about using a business valuation to show you how to improve the value of your business … one of my favourite topics when speaking to entrepreneurs!

It starts with the initial challenge that many small businesses are not priced by the market at the same value levels as that expected by the entrepreneur … not an easy conversation to have with the client.  The reality is that most small and mid-market business owners have never bought/sold a business before, and they are sometimes shocked by how the market views their business.

But the good news is, if you have some time, there are ways to lift the value of your business in advance of when you want to sell.

Written by Dan Jennings

May 9, 2013 at 12:04 am

Cash-Rich Buyers Prepare to Spend

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http://www.profitguide.com/manage-grow/strategy-operations/the-battle-is-on-as-cash-rich-buyers-prepare-to-spend-51449

Check out this article on Profitguide.com about a topic I’ve written about here before … there is plenty of capital out there (both debt & equity) to fund acquisitions.

Also:

“The most important takeaway is that if you’ve been waiting for the right time to sell, you need to make sure your business is ready for acquisition when the opportunity arrives,” says Loomer. “Run your business like it’s always for sale.” 

Written by Dan Jennings

May 8, 2013 at 1:07 pm

Do you own a valuable business? Check out this video

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When you spend a lifetime trying to build a successful business, it leaves little time for much else, including thinking about an exit plan; but even if you are planning to pass the business on to family, you want to ensure you are offering them a valuable business.  Whether you are creating an exit plan for the short term or for 20 years hence, it’s never too late or too soon to start understanding – and increasing – the value of your business.

Seventy percent of all business owners in today’s market plan to sell or pass their business on within 10 years.  But 76% don’t have an exit plan, and many do not know the value of their business.

The Sellability Score is a tool to initiate the process of building a plan.  By using it as a gauge to measure how sellable your business would be today, it can help you focus on where to increase your efforts within your business.  The online tool is quick and easy to use, and it generates a personal report that highlights:

  • What you should consider when thinking of transitioning your business;
  • How saleable your business actually is;
  • The likelihood of receiving a premium offer; and
  • What your financial options are.

Click here to start your confidential (and free) assessment:  http://sellabilityscore.com/en/#started

After completing the questionnaire online, you will be provided with a score for your business and a summary of what the score means.  Meanwhile, I will be notified that you have completed the questionnaire and the software will generate for me a copy of the comprehensive report for your business.  Once I receive the report, I will set up a time with you so we can meet, review the recommendations together, and discuss any next steps required.

Written by Dan Jennings

May 7, 2013 at 5:47 pm

Selling a family business requires preparation

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http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/succession-planning/the-right-way-to-sell-a-family-business/article11664885/

The theme of this Globe article about selling a family-owned business is planning and preparation.  I also like this paragraph:

“Selling a business and planning for succession is emotional … It creates not only work stress, but family stress as well.  That’s when you need to lean on your advisers.”

Written by Dan Jennings

May 4, 2013 at 5:59 pm