Dear BTF Community,
In this interview, Ben Parsons, President and CEO of DALMAC, makes three main points about business acquisitions:
- Importance of Accurate Financial Information: Parsons emphasizes that the ability to produce accurate and timely financial information is crucial for a successful acquisition. Delays or issues in providing this information can create doubts for potential buyers and derail a deal.
- Understanding Seller Motivations: Parsons highlights the importance of understanding why a seller wants to sell. Misunderstandings about motivations can lead to failed transactions, especially if the seller isn’t truly ready to sell or has unrealistic expectations.
- The Role of Advisory Services: Parsons advises that deals involving advisory services are more likely to succeed. He points out that many sellers, particularly those in smaller transactions, may not fully understand complex deal structures, and having an advisor can help navigate these challenges and increase the likelihood of closing the deal successfully.
Enjoy,
Mark
Ben Parsons, President and CEO of DALMAC, a manufacturing business in Charlottetown, PEI, is no stranger to business acquisitions.
The print, signage, and promotional products company, primarily serving Atlantic Canada, was created via three successful acquisitions, and one partnership, executed by Parsons and his business partner Ben Howard.
Before creating DALMAC, Parsons worked for a variety of owner managed companies in Controller and CFO roles. In those roles he worked on many transactions in different capacities and has learned lots of dos, and do nots, along the way with respect to transactions.
He highlighted his experience with business acquisitions, emphasizing the importance of accurate financial information and understanding seller motivations.
Parsons noted that deals with advisory services are more likely to succeed. He advised potential sellers to prepare years in advance, identifying and addressing any business “warts” to maximize sale value.
“The number one table stakes thing is can they produce accurate financial information quickly,” he said.
Any delays in that regard never sets a deal off on the right foot.
“It always gives a buyer a bit of like, ‘Why aren’t your financial statements done? And why can’t you tell me right now how you did last reporting period?’ An equally or more important thing too, would be the motivations of the seller. Why do you want to sell? And we’ve had failed transactions where they don’t want to sell. They thought that they did. And then when you actually talk through a deal structure with them, you realize you in fact, don’t want to sell. You wanted to sell, as long as you could tell someone exactly what the terms were, not have anyone challenge you on them and etc, etc, but you in fact, don’t want to sell.
“So dealing with shareholder directly is often much more challenging. I’ve done that a couple of times versus having an advisor in the deal. Deals that have advisory services, this is anecdotal, but I’m sure there is a significantly higher ratio of completion than deals that don’t have those advisory services. Because typically, if you’re below the mid market range, if you’re doing $1 to $10 million transactions, which is many in Atlantic Canada, you’re not dealing with an overly sophisticated seller. They would have a hard time understanding working capital, hinges and earnouts and vendor take back notes and all those things that are going to be 100 per cent necessary from your financing partners perspective. And so those would be chief among the challenges, I would say top of the list challenges.”
Parsons will be on a panel discussion at the upcoming Atlantic Business Transitions Forum in Halifax. The topic is Common Deal Challenges: How To Spot, Address & Avoid Them.
A few years ago, he attended a Business Transitions Forum in Halifax where he was on a panel about acquisitions. He was representing the buy side.
“I purchased the initial business seven years ago. And then we’ve done three other acquisitions to create what we now call DALMAC. So I was participating in a panel in that capacity,” said Parsons.
Deals are part art and part science.
“Oftentimes it’s just the emotional, the emotions that are part of any deal, and so it’s sort of how to navigate them.”
If Parsons was talking to a company that’s looking to sell, what would he tell them they should do right now to prepare for that? “You need to start years in advance of wanting to sell. So if you want to sell, you should be, I would say ideally, starting three years at least prior to that transaction. And you have to try and put yourself in the buyer’s shoes.
As someone said to me once, it’s the old adage, no one wants to hear that their baby’s ugly. But you have to sort of look at your business and go, where are the warts? Because the owners know where they have single points of failure. They know where they have people on their team that maybe aren’t as strong as they could be or should be, but they’re being supported by maybe them or maybe another team member who’s propping them up a little bit.
“They know where the skeletons are. So you need to look at this well in advance. And it’s not to say that you can’t do a deal if you don’t do that, but you’re not going to maximize your sale proceeds if you don’t, frankly, because you will not get through bank due diligence, the buyers’ teams due diligence, if you don’t spend some time on that yourself, and it’s not something that you can fix in six months, it’s something that you need to start well in advance.”
Mario Toneguzzi is a veteran of the media industry for more than 40 years and named in 2021 and 2024 a Top Ten Business Journalist in the world and only Canadian. He also made the RETHINK’s global list as a Top Retail Expert 2024 and 2025.