The Unique Considerations Of Selling A Service Business

February 2, 2022 | Bonnie Elgie

M&A activity has been high during the uncertainty of COVID, and selling a service business adds another layer of complexity to valuations. Steve Duyvewaardt, former co-owner of SDM Realty Advisors, feels great after his sale and is sharing his tips for ensuring you get maximum value from the deal.
  • Why a service business needs to know the best time to sell
  • How to choose the right buyer in a multiple offer situation
  • Five tips to maximize the deal’s value
  • The importance of agreement among partners

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An interesting turn of events led Steve Duyvewaardt and Dale Mumford to think about selling their successful commercial property management company in 2019. The firm carried key man insurance, a common type of insurance for small business that helps protect the value of the company. However, the partners wanted to confirm that the coverage was an appropriate reflection of the value of the company and to ensure the correct coverage, they had the business valued by an investment banker. The result confirmed that the existing coverage was inadequate. The valuation was compelling enough to generate a discussion between the partners and their spouses about selling the company. After careful consideration of the ages of the partners, combined with a strong valuation, a decision was quickly reached to take the business to market.

SDM Realty Advisors started in 1994 after the founding partners had already worked many years together in the property management field. With Steve skilled at securing new tenants and renewing existing tenants and Dale an expert at managing properties, they quickly grew the boutique firm’s portfolio to 7.5 million square feet of managed properties that included office buildings, industrial warehouses and large retail centres.


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When asked what led to their decision to go to market when they did, Steve answers, “In a service business that is highly tied to the principals being in place, you need to create a liquidity event at the right time, or you can be on the back foot. We were at a point in our careers where we realized we didn’t want to age out or fall into the trap of staying too long. You don't want to have an unfortunate health incident, or something else terrible happen because then a lot of the value evaporates.”

Dale and Steve were solidly aligned on their reasons for selling and their decision to sell when they did. He adds that it can be challenging for companies with multiple partners to make sure everyone is on the same page about the sale, especially in a service business. “If you've got a dozen or more partners across the country and the majority owners are selling, and the minority owners are unhappy about selling, then you have to carefully navigate the sale process to ensure a successful outcome.”

In Fall 2019 they started working on the underwriting and preparing the offering memorandum. Steve says, “We ended up pausing things, but planned to go to market again in February 2020.”

Unfortunately, that very week in February COVID took hold in Vancouver and things began to shut down. Once again, the partners halted the process. It wasn’t until fall 2020 when their investment bankers suggested the market had opened up again and the two men agreed the time was right.

Like so many others during the early days of COVID, Steve and Dale refer to it being an extremely challenging time, but revenues weren’t impacted, and they proceeded to successfully launch to market in September of 2020 and 14 offers came in. A clear front-runner emerged and the LOI with Warrington PCI Management (WPM) was inked in December and the deal closed on March 1, 2021.



With complimentary core values and a similar primary business focus, the two companies were a strong fit and the acquisition expanded WPM to become BC’s largest commercial property management firm.

Many factors aligned for them throughout the deal, but what initially appealed was the fact that WPM was also a Vancouver-based company, they were conveniently located in the next building (a handy coincidence with COVID travel restrictions), both Dale and Steve were impressed that the WPM founders had successfully transitioned to the second-generation management team.

He sums it up by saying, “It was a really strong comfort point during the transition to go to our clients and our staff and say, ‘Look, there's a young group of people who are motivated, they're driving the business and there's a big runway’.”

Steve’s tips for a successful deal:

  • Hire a good investment banker to value the company. Choose one with experience in your business—SDM needed someone who knew the intricacies of a real estate services business. A good investment banker will rebuild your income statement and balance sheet from the GL up. What that does is ensure you have every single answer to any question that might come up during the deal.
  • Have that same good investment banker help with the deal. A good investment banker can create competitive tension amongst the purchasers. They can also act as a buffer between you and the unsuccessful purchasers which could be important if you end up doing business with them again in the future. It's easier if they’ve negotiated with your broker rather than directly with you.
  • Get a good law firm with lots of M&A experience. During the deal, the document flow is significant. You want someone who really understands the complexity of the documents on your side.  
  • Get a proper offering memorandum put together. Your investment banker can put that together with the salient facts, send a teaser email, and create a database of potential buyers.
  • Set up a data room. Whether it’s virtual or physical, make sure your data room contains the right information because it has a big impact on the value of your company. Most business owners are too absorbed in running the business to effectively prepare this information. Hire the right team to get this done.
  • Make the most of online meetings. The pandemic made it challenging to meet in person and a year ago we weren’t as great on Zoom as we are now. To make the most of meetings with potential buyers, hire a videographer to create a virtual fireside chat. We simply answered questions we knew would be asked. Not only did this approach save a lot of time and travel, but it was very well received and helped communicate a lot of the right messages about our values.

Steve feels the SDM Realty Advisors sale was an exceptional experience and a good choice. Thinking back on it, the process was exactly what they thought it would be.

Steve concludes, “When you own the business, the weight of ownership is on your shoulders. You're working at the business, leasing space, managing buildings, pitching for new business, plus you’re working on the business and dealing with liability issues, staffing issues, regulatory issues, that kind of stuff. Well, now that weight has been lifted, and we're simply focused on doing good work in the roles we were hired to perform—and that feels very, very good.”


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