The Importance Of Having Good Advisors When Selling A Company
Mario Toneguzzi
Andrew Kemper has worked for over 15 years providing corporate finance counsel, expertise and advice to mid-market private and public companies.
As a partner with Capital West Partners, based in Vancouver, Andrew has developed experience across a wide range of industries including financial and business services, retail, mining and industrial manufacturing and services.
Key takeaways:
- When a company is considering a sale, a key is whether that company is ready for sale and if the timing is optimal to maximize value;
- Usually people only sell a business once in their lifetime so it’s so important for them to hire good advisors to help them through that complex process - people that do it all day, every day;
- Many people underestimate what’s involved in the sale of a company.
Enjoy,
Mark
Andrew Kemper has worked for over 15 years providing corporate finance counsel, expertise and advice to mid-market private and public companies.
As a partner with Capital West Partners, based in Vancouver, Andrew has developed experience across a wide range of industries including financial and business services, retail, mining and industrial manufacturing and services.
Kemper says about 80 per cent of Capital West’s business is selling mid-market private companies valued at between $20 million and $250 million.
When a company is considering a sale, a key is whether that company is ready for sale and if the timing is optimal to maximize value.
“Are there things that need to be cleaned up and fixed up before they go to market - things they can do to plan ahead. That’s one side of it. Usually people only sell a business once in their lifetime so it’s so important for them to hire good advisors to help them through that complex process - people that do it all day, every day,” says Kemper.
That includes everything from merger and acquisition specialists to tax specialists to legal advice.
“It’s a mistake not to hire a good M&A lawyer as well. Somebody who does deals all the time and knows the key issues to look for in deal agreements,” adds Kemper.
He was Conference Chair at the 7th Annual Business Transitions Forum in Vancouver in November.
Prior to joining Capital West Partners, Kemper spent six years with one of the large national accounting firms, where he was a manager in the assurance and advisory practice.
At Capital West, his completed mandates include valuations, fairness opinions, strategic acquisitions, sell-side engagements and raising capital for buyouts and business expansion.
Kemper received his Bachelor of Commerce, with honours, from the University of British Columbia’s Sauder School of Business. He was also an Academic All-Canadian with the UBC Thunderbirds hockey program.
He holds the designations of Chartered Professional Accountant (CPA, CA) and Chartered Business Valuator (CBV).
Kemper says many people underestimate what’s involved in the sale of a company.
“They might have a decent idea of the kind of steps and how they would go about it but they don’t really understand the depth of the time commitment and complexity to get a deal over the finish line,” he says.
“There’s a lot of strategic decisions that happen along the way that they don’t really think about in their day-to-day work because their primary focus is running the business. They underestimate the amount of due diligence required, the time that’s going to be spent dealing with questions and answering questions, providing documents.
“That’s a big thing business owners probably underestimate. If they try to do it on their own, they often will not be successful. They not only fail to get a transaction completed but the business will likely suffer as well because they lose focus on the day-to-day operations of the business while they spend time trying to get a deal done.”
By hiring someone to run that process, it takes a lot of the burden off the operators of the business so they can continue to focus on running the business and making sure it continues to perform well.
Kemper describes the current M&A market in Canada as healthy.
“We were in an M&A boom before COVID showed up. There was a bit of a pause because of COVID. A lot of businesses were closed and it was a tough time to do a deal. 2021 came back strong and was probably one of the best years ever for M&A. Some of that volume may be because of deals that paused in 2020 and were picked up and completed in 2021,” he says.
“I would say today it’s slowed down a little bit but it’s still pretty healthy if you look at volumes compared to long-term averages. There’s still lots of deals getting done today. I would say buyers are a bit more cautious with due diligence and closings are taking longer.”
Kemper says there’s an abundance of capital with private equity funds and other financial buyers who are keen to transact and need to deploy that capital in a limited amount of time.
“Rising interest rates are definitely an interesting topic right now. The increase in rates is impacting the cost of debt financing buyers can get on deals which obviously impacts valuation,” he says.
“While interest rates have increased recently, they are coming off historic lows and had nowhere to go but up. If you view interest rates with a much longer-term lens they are still at very reasonable levels.”BACK
