No Two Exit Stories Are The Same – No Matter How Many Times You Buy And Sell
May 11, 2022 | Bonnie Elgie
Whether you are a first-time business founder or a seasoned entrepreneur, there are always lessons to be learned. Every deal is different and each exit or transition brings it own set of challenges and opportunities.
Barry Wood is a serial entrepreneur with over 30 years of experience buying and selling companies. He’s ridden the ups and downs of the economy and invested in several different types of companies. In this issue of the BTF Insider, Barry reflects on his career and shares his thoughts on the factors that lead to a successful sale, as well as what to watch for throughout the process, including:
- How a reinvigorated botched acquisition resulted in a sweet deal for employees
- Why the courage to do something different can lead to a new level of success
- How selling to your biggest customer can work out for the best
- Six key lessons any entrepreneur should heed
You’ve worked hard to create a bright future for your family. Our team is here to help you navigate key life decisions, showing you the options so you can make choices with confidence.
Barry Wood knows what it takes to build a company. An innovator by nature, Barry has decades of experience starting and acquiring businesses ranging from manufacturing to sales distribution and services. Along the way, he’s encountered his share of challenges and tough lessons, as well as the steps required to build a healthy employee culture and set a company up for success.
After graduating post-secondary as a chartered accountant, Barry got involved in merchant banking on Bay Street, investing on behalf of an institution focused on private equity and private debt financing. While he enjoyed the work, he had a “hankering” to get involved in a business of his own, which lead to starting a recycling business in 1988 in partnership with a chemical engineer. The business lasted for about six years and included a meteoric rise, and a meteorite drop for market reasons.
Bit by the entrepreneurial bug, Barry was keen to start another business or get involved as an investor. He remembers, “Following the sale of our plastics recycling business, an investor in a venture capital fund asked me to run this business that they were buying. It was a really exciting opportunity and reaffirmed my desire to continue with this type of work, looking at succession and acquisition situation where somebody was retiring or deciding to step back from their business, and getting involved in it.”
Thinking about an exit? Here are some questions you should ask:
- What is the future ownership structure going to look like?
- What's the governance structure?
- What would be your role in that business?
- How much money do you have at stake again?
- Can you really be comfortable with whoever it is that you're going to be partnering with?
The structure in this transaction and follow-on ones included Barry investing some money alongside private equity investors and becoming the operator of the of the business, which was an overhead industrial door business. About three years after the acquisition, the company was sold to a US public company. It was very successful for the investors, but it was difficult for the employees as the integration process was anything but smooth. For Barry, seeing how difficult this “botched acquisition” was for his employees inspired him to ensure there was a cultural fit in future deals and that employees were well taken care of.
In a twist of fate, the failed acquisition led to a subsequent opportunity down the line where Barry and investors were able to reinvigorate the door company into a new business called TNR Doors.
“This is a great news story. The employees that lost their jobs, because of the failed acquisition in the first go around became owners of this follow-on business. They successfully sold that business three years ago to a German door business and all of my former employees did really well in that opportunity,” he says.
A few hard lessons followed with Barry’s involvement in a precision machining business supplying aircraft parts and medical instrumentation parts, among other things. Barry says this is the only business where he lost money, largely due to not seeing eye-to-eye with an investment partner. A window business he also invested in was hit hard by the 2008 – 2009 recession.
In 2013, Barry joined Ontario Excavac (“OE”) as an investor and CEO. Ontario Excavac is the largest and leading provider of hydro-excavation, site support and restoration services to utilities in the Greater Toronto Area. Hydro-excavation uses purpose-built “hydrovac” trucks that apply high pressure water to safely remove soil around underground utilities, then vacuums the dislodged soil/water slurry into an on-board tank for disposal.
Barry spearheaded the launch of the first and only hydrovac slurry processing and recycling facility in Ontario, located on OE’s premises. This state-of-the-art facility significantly reduces environmental impact and carbon footprint, drives sustainable development while concurrently generating considerable cost savings for customers. The hydrovac slurry, comprising water, aggregate, sand and silts/clay fractions, are all separated and re-used.
It takes courage to try something that’s never been done before and Barry admits that there were some sleepless nights.
“While we felt there was a lot of risk, at the same time, we felt that was absolutely necessary to start the recycling facility. And we felt we had the experience set that would allow us to take a reasonable shot at doing it. Fortunately, we're able to do it quite successfully,” he says.
Getting the company’s major customer, Enbridge, onside was key and OE made a conscious effort to align their innovation with Enbridge’s pillars of safety, sustainability and savings.
Within a year of opening their new facility, OE was profitable and over the years, saw that profit continue to grow. He adds that innovation in sustainability-related projects has endless possibilities.
“When you get involved in sustainability initiatives, there's often things that come out of that that you never saw never realized that that give rise to really interesting opportunities.”
Enbridge acquired Ontario Excavac in 2021. The long-standing relationship and aligned cultures played a key role in the deal. Barry felt the deal also provided a good long-term outlook for employees and he has stayed on as the company CEO.
He adds, “I think there's just all kinds of opportunity working with Enbridge to continue to grow this business. That's my mandate. We share a vision of being able to do some really interesting things, working together.”
With so many years and experiences behind him, Barry says that there are few key lessons that he gladly shares with other entrepreneurs seeking advice:
- Develop an understanding of the culture of the business you're getting involved in. Respect the culture of that business that you're acquiring and understand that the former owner or owners of that business will have trouble detaching themselves. It's important to manage those relationships really well. And when it comes to changing the culture, be very careful — tweak it, modify it and be constantly seed planting to create new ideas and new ways of thinking about things. Whatever you do, don't force yourself on that culture.
- Respect is the cornerstone of absolutely everything. If you can't foster an environment where people respect each other, you're probably not going to succeed.
- Create a workplace where there's a good work life balance. You have to have a workplace where you hear people laughing. Even though companies have been working remotely over the last couple of years, the return to work – even in a hybrid model – makes maintaining balance essential.
- Hire a financial advisor. If you are starting to think about selling, put the appropriate steps in motion to get ready for it. Be proactive about taking the steps that are necessary to start positioning your business for sale.
- If you are thinking about rolling over some of your equity and staying in a business, make sure you have got a co-investor you can work with. Whether you're an equity investor going forward (be it through an acquisition, or a sale and a rollover of your equity), you really want to be careful about who you're getting in bed with.
- Never buy a business from somebody that you can’t go out for dinner with or like socially, as a person. Barry adds: “I've been successful when the people I bought a business from are genuine, good people, and the values that that they stood for are embedded in the culture of the business. It sets the business up for success.”
It’s sage advice coming from a serial entrepreneur who has experienced many different exit scenarios and is looking forward to what the future holds.