Dear BTF Community,
In this interview, Kevin Shaw, President & Managing Director at Baker Tilly Capital, and Chair of the upcoming Vancouver Business Transitions Forum, discusses:
- Why we’re seeing more businesses for sale in Canada these days;
- The keys for a successful sale of a business; and
- Why the Business Transitions Forum is important for entrepreneurs.
Enjoy,
Mark
Negotiating a successful merger or acquisition takes more than expertise and experience. It also requires deep focus, serious goal-setting and the strength and stamina to go the distance.
Kevin Shaw, President & Managing Director at Baker Tilly Capital, has worked with businesses in a variety of industries ranging from hospitality to construction in providing his expertise and experience in acquisition planning, divestitures, business strategy and business transition.
Baker Tilly is a large international accounting and advisory firm. Shaw is on the advisory side helping people either sell their business or buy others.
He said he’s seeing more businesses come to market these days.
“The tailwinds here are the aging Baby Boomer demographics. Canada is a small business entrepreneurial country. So the vast majority of our workforce is in private business. We don’t have large public companies or very few of them,” said Shaw.
“99.1 per cent of all businesses registered in Canada are less than 100 people. If you think about that and you overlay our national demographics, you’re definitely seeing the Baby Boomer circa age with the front end of that wave is early 70s and they’re finally starting to get the message that it’s probably time for them to stop working and that’s causing us to see more people saying hey we want to sell our business.”
Shaw is Chair of the upcoming Vancouver Business Transitions Forum on November 6.
When asked the key to a successful sale of a business, Shaw said a buyer is looking for a business usually not as a hobby but looking for a business that is producing profit.
“They need that business to continue to produce profit. So the whole equation revolves around is this business going to continue to produce profit and the more that a seller can assure a buyer that it will, the better chance they’re going to have of selling that business,” said Shaw.
“The way you would assure a buyer of that is preferably you would have a management team not just yourself because if you leave the business probably dies because you have all the relationships and the knowledge. So if you have a management team, and the knowledge dispersed across a platform of people . . . that would display you aren’t as essential to the business running as an outsider might think.
“You would get things like long-term contracts with customers that are unlikely to break where a certain amount is guaranteed. If I’m a buyer that shows me that you do have some proof of revenue and hopefully therefore profit into the future.”
Shaw said it’s also important to have processes and reporting structures in place that allow a buyer to operate as more of an investor as opposed to someone who is just buying a business and operating it which is more like buying yourself a job.
“If you can demonstrate those things, the risk for buying it goes down to the purchaser. If the risk goes down, then typically the valuation goes up,” he said.
“The more things that a vendor, or a seller, can do to decrease the perceived risk of those future profits then the better chance that seller has to sell their business.”
Shaw said the Business Transition Forum gives entrepreneurs plenty of information on how to sell and how to buy companies.
“Typically this is a very black box within the mergers and acquisitions, or investment community. There are many moving parts. But in coming to the Business Transitions Forum, (people) are going to meet every advisor that you could meet on your team when going through one of these processes,” he said.
“You’re going to get insight into what are important things to look for if you’re looking to acquire a business or looking to sell a business. You’re going to get some comfort that there actually is a tried and true process around selling a business that is very much unlike buying and selling real estate which most of us are accustomed to and often liken it to. Creating some clarity and removing the opaqueness from that process will give an entrepreneur comfort that there are people out there, advisors, to help or if they have the aptitude there is a process they can follow to do it themselves as well. And this is all packed into one day.”
Mario Toneguzzi is a veteran of the media industry for more than 40 years and named in 2021 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.
