The Unexpected Factors That Can Be Deal Breakers – In Conversation With BTF Edmonton Chair Cheryl Lockhart

Bonnie Elgie

BTF Edmonton returns on May 11, 2022. We recently caught up with this year’s BTF Conference Chair, Cheryl Lockhart, to discuss why Edmonton entrepreneurs should plan to attend. We also discuss the local challenges and opportunities and the overall outlook for the Edmonton region.

As part of our conversation, Cheryl shares:

  • Why a healthy workplace culture is a key component in a deal
  • The “other numbers” buyers are looking for – and it’s not financials
  • The key steps a family business should take ahead of a transition
  • Why she believes BTF one of the most practical and information-packed conferences entrepreneurs can attend.

There are many practical takeaways in this article that are actionable today. Enjoy this issue!

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.

Can you share a bit about yourself and your professional background?

I am a co-founder and partner at Omni Management Consulting Alliance where we work with small and mid-size businesses to build and implement strategies for long-term success. I originally started my career working for the federal government in international trade promotion in the Middle East and Africa. One of the things that frustrated me was that we could only work with companies to a certain extent and it was very clear that a lot of the businesses we were trying to work with were overwhelmed with information and didn't have a solid business strategy.

About 20 years ago, I moved back to Alberta and thought, why not work with these companies in a way that will help them in a variety of business areas? I started consulting, and while I still do some international trade work, my focus is primarily on strategic planning and implementation support, helping clients move through the change process. Ten years ago, we launched Omni MCA and now my business partner, Dena Gillies, and I, with our Associates, provide consulting and coaching services that help business owners grow their business. We also work with them to prepare for transition. Many of our clients are family businesses. 

Why do you think conferences like BTF are important for entrepreneurs and what value can they bring?

I really believe BTF is one of the most practical and information-packed conferences entrepreneurs can attend. There are few events that I recommend to clients, but BTF is one of them. Omni MCA clients that have attended have all agreed that it was very beneficial for them. The conference sessions are practical and applicable to everyone because every business owner has to think about transitioning at some point. By attending this conference, business owners are being intentional about what that transition will look like, or they're starting to think about it proactively.

Unfortunately, we see too many businesses transition because of the owners’ poor health or other external stressors, and that doesn’t lead to ideal outcomes. We really want them to think about the bigger picture and BTF inspires them to network with other business owners and to start thinking beyond where they are already.

Our record stands for itself - a stellar 90% success rate selling the businesses we've represented. When choosing an Advisory Partner "good enough" just isn't! Let us use our expertise to help you optimize your exit and maximize your return.

What are the challenges and opportunities right now for Edmonton businesses?

There are a lot of economic and structural challenges. Now we're going to be facing even more supply chain challenges with product coming out of the Lower Mainland.

I think staffing is the biggest issue right now. It's always been a challenge in Alberta but companies have traditionally been able to get around it by paying a little more money but that's not going to work forever. So, attracting and retaining people is something our clients struggle with. This going to become an important issue in M&A negotiations as well. The biggest concern for new owners or buyers is whether they will have a team once the purchase is complete, or is everybody going to leave in the coming days, weeks or months?

Owners need to address matters like employee engagement early on through meaningful conversations, engagement programs and assessing their compensation structure. If you have those things in place, it will help capture the attention of buyers. And I think that ties into the greatest opportunity right now: building a positive and inclusive culture. That's foreign to many businesses because they're not used to talking about it in an overt way. Buyers are  looking for high performing cultures, learning cultures, employees who are open to change and who are agile, and you can't just flip a switch on that. We know deals succeed or fail based on the cultures of the two companies, and you're not going to hit those synergy targets if you don't manage the culture during an integration. It's traditionally been considered a soft piece, but it’s now essential, and small- and mid-size businesses need to pay attention.

Predictions are that Alberta is poised to boom again. What is the outlook for Edmonton in 2022?

Edmonton has always had a resilient business community that shifts and adapts as needed, and Edmonton will thrive in 2022. But, they also need to be willing to do things differently. The pandemic has fundamentally changed how we do business, and we need to accept that “normal” will look different going forward, especially when it comes to global supply chains and business opportunities.

Is understanding how different cultures conduct business going to help a company compete internationally?  

Exactly. I think a lot of business leaders feel challenged when they go into a negotiation with a company from another country. The new buyers are coming in with a different way of thinking and for local businesses it can be hard to make that shift in their mind.

What do you think are some of the topics that will resonate with local entrepreneurs?

I just attended BTF Vancouver and there was a lot of discussion and questions in sessions about workplace culture and employee retention. I really appreciate that the organizers are allocating more time to those topics because every entrepreneur wants to know their team will be looked after once they leave. 

We also need to talk about what numbers – besides financials – buyers are looking for. That might be employee retention statistics or employee satisfaction surveys, or maybe voice of the customer surveys. Efficiency numbers such as sales and operations targets are also key. Sometimes those key performance indicators are available, but most often they're not (or are in the owner’s head!). If a buyer wants to know how stable your customer base is you must be able to say more than ‘my customers are really happy’. You need data and systems to collect that data. If you can say, ‘we've tracked customer satisfaction for five years and here’s what we’ve found, and here are the initiatives we've taken when we've heard complaints', those are the numbers that add value to your business.

Are there some trends that you think are a result of the pandemic specific to manufacturing or oilfield services?

I'm starting to see more interest in diversification geographically (exporting internationally) or by user group (application of technology that was originally developed for oil and gas in other sectors). So, there's more interest in R&D or channel partnerships to create commercially viable products that are acceptable to a broader range of audiences I’m also seeing re-shoring as a trend. Bringing back production from overseas – either in-house or finding a local supplier are also top of mind. Companies are asking 'what else can we produce to maintain or grow our facility here?'. Many are accessing government funding to explore these opportunities.

One of the areas that you specialize in is helping entrepreneurs and family businesses professionalize their business ahead of exiting. What does that mean?

Most clients have started their business and brought it to a certain point based on sheer willpower and hard work. Then they realize that they're working too hard because they haven't put systems in place to make things easier. They're often very hesitant because most entrepreneurs don’t want to become a big bureaucracy and don’t want to change something that’s been successful to-date. But if they want to grow or increase the value of their business, they inevitably come to a point where they realize they do need to do things differently and need help to do so. HR is often the first pain point where clients come to us for help. For example, they need assistance in hiring and putting formal processes in place to help prevent more bad hires. Or, they want help to create more team accountability and with performance development, we can align the goals of the employee with overall corporate goals.

While some businesses will choose one area to focus on because it is the most urgent, we recommend they put the professionalization of their business into the framework of a strategic plan. With this process, they get everyone on the same page, working towards a common set of strategic objectives and establish a handful of KPIs that measure success (and will be important for buyers to see, as I mentioned earlier). In the strategic planning workshops, we discuss the timeline for transition and what projects and strategic initiatives will make the business more attractive to a buyer and increase the sale value. In fact, unless a transition is imminent, we don’t specifically talk about a transition strategy – the transition/succession should be part of the overall corporate strategy. That way, your transition doesn’t conflict with what the rest of the business is doing. 

What are some key steps that family businesses should take ahead of an exit?

When a family business is transitioning from one generation to the next two things come to mind.

The first is to have an independent assessment of the next generation to see what skills they're bringing to the table and whether they align with the available roles. There are many tools to support that process. One that we use at Omni MCA is Harrison Assessments - Paradox Mastery Guide and Organizational Analytics. What's interesting about that assessment is that it takes a person and measures them against a very specific job, like president, vice president of sales or GM, and creates a score to show where they match up with the ideal attributes of a role and where they may be lacking. That lends itself to a training plan to address gaps or opens up conversations whether this person should be the president rather than another family member or an outsider who is more suited to the role. It’s a way to at least start that difficult conversation because it's a third-party assessment based on research and it takes the emotion out of things. The assessment also looks at skills the parents might not have or don't think the business needs, but that are necessary for a successful evolution of the business. The next generation should not be running things the same way that their parents did.

Second, it’s helpful to set up an advisory board to raise these questions and help the family move through these difficult conversations and topics. Because they’ve been there, or they’ve worked with other family businesses, they’re not addressing the tax or the legal aspects of transition – BTF is full of people that can help with that. Instead, they can work through the intangible sides of transition, which includes talking to mom and dad about:

  • What's your role once you complete the transition?
  • What does transition actually mean?
  • What's the hard line in the sand? Are you dipping in and out because you don't trust the next generation?

I am very passionate about this because I’ve seen some unnecessarily difficult transitions, as well as many successful, rewarding transitions, and the process has to start years in advance

Eventually, every business will need to transition and the time to start to plan for it is now.

Join us at BTF in Edmonton May 11, 2022, where you will learn from entrepreneurs and business experts who have travelled down the transition path before you.  

Register for more information or visit Save 35% by accessing our early bird rate before January 11th.