Watch the third part of our webinar series: IT’S TIME – Selling Your Business With Confidence with Axel Christiansen. Axel is one of BC’s top M&A advisors – helping guide business owners through these interesting times.
In this presentation, Axel shared his experience working with business owners through a global pandemic and what you should be aware of during the sale of your business.
View the full webinar below:
Slides from this presentation are available upon request. Please contact mark@anchorpacificgroup.com.
Key Points by Axel Christiansen
Market Trends:
Undeployed North American Private Equity capital (“dry powder”) has doubled in the past decade.
Sellers (competition) are coming – more boomers are beginning to sell – you don’t want to be the last one out.
What’s Next?
Buyer appetite is still strong
Value expectations reset
Deal structure impact
Defensive industries have an advantage
Boomers still need to retire
Shift towards buyers market
Exit Readiness:
Are you emotionally ready?
Separating from your life’s work will be difficult
Lack of emotional preparation ruins transactions
Need a clear picture of what you are moving towards
There are experts that can help
Getting the business ready for exit
Management
Operations
Corporate
Finance
Valuation:
Value is a function of historic cash flows and the risk around the stability of those cash flows in the future.
Multiple – the measure of the perceived risk of future cash flows.
The inverse of the multiple is proxy for purchaser’s expected return (higher risk – lower multiple)
Buyer Segments:
1. Strategic
Competitors, suppliers, customers
2. Financial
Private equity groups, family offices, search funds
3. Management Buyout (MBO)
Existing management team are the buyers
4. Initial Public Offering (IPO)
Sell shares to the general public
Selling Process:
1. Internal Diligence & Valuation
Confidentiality agreement
Determine the seller’s objectives
Collect financial and operational information
Develop a strategy
Prepare valuation
Assemble exit team
2. Marketing
Prepare teaser & Confidential Information Memorandum (CIM)
Develop purchaser roster
Setup data room
Distribution of teaser
Confidentiality agreements
Management presentations
3. Letters of Intent (LOIs) & Negotiations
Data room and staged information release
Respond to diligence questions
Selective site visits
Collect LOIs
Leverage for improved terms and recommend final LOI
4. Due Diligence & Structuring
Manage the due diligence process
Control volume and detail of information requests
Protect against deal term slippage from LOI
Push to maintain agreed timelines
5. Legal, Closing & Post-Closing
Negotiate purchase and sale agreement terms
Manage lawyers to ensure focus on key issues and timeline
Closing financial review and working capital adjustment
Ensure timely collection of any trailing consideration
Typical Challenges:
Vendor emotions
Vendor fatigue
Value
Normalizations
Consideration
Working capital
Market conditions / declining results
Reps, warranties & indemnities
It is not a deal until it has failed at least three times.
Guest
Axel Christiansen – Senior Vice President – Mergers & Acquisitions
Axel brings over 20 years of mergers and acquisitions and corporate finance experience to Renaissance Mergers & Acquisitions. With a career focused on serving small to mid-sized BC companies across a wide range of industries, he’s routinely sought out by entrepreneurs who want to successfully transition their businesses. Born in Hong Kong, raised in the Philippines and a Vancouver resident for over four decades, Axel was a founding member of Vancity Capital – the mezzanine financing division of Vancity Savings Credit Union. He then moved into the role of Managing Director for BDC Capital’s mezzanine financing group covering BC and the Yukon. In both roles, he was actively engaged in structuring and negotiating merger and acquisition transactions.
Anchor Pacific Investment Management Corp. (“Anchor Pacific”) is a Vancouver, BC-based portfolio management firm, which leverages process, technology, and infrastructure to democratize the process of managing endowment and pension style investment portfolios to deliver innovative, high-touch, and transparent investment programs across the full spectrum of asset owners and investment consumers.
To learn more about how Anchor Pacific can help you shelter, protect, and grow your money, contact us at 604-336-9080 or info@anchorpacificgroup.com
