Value Unleashed

This snapshot provides an overview of the Auto Parts and Equipment industry through the third quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

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This snapshot provides an overview of the Building Products industry through the third quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

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This snapshot provides an overview of the Construction and Engineering industry through the third quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

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This snapshot provides an overview of the IT Services industry through the third quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

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This snapshot provides an overview of the Packaged Food and Meats industry through the third quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

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The Federal Reserve raised rates to 2 - 2.25% and signalled that the pace of increases will likely remain constant. One more increase is expected this year in December, and three increases are expected in 2019.

The Trump Administration's trade disputes with China, Canada, and Mexico will likely continue to escalate, potentially leading to slower growth and higher inflation.

Two-thirds of U.S. economists expect a recession by the end of 2020, with 41% of respondents pointing to trade policy as the biggest downside risk.

If your business cannot generate liquidity for shareholders, it has no value. This article reviews Understanding Your Liquidity Options, one of the main sessions at the Business Transitions Forum in Toronto, which was moderated by our founding partner, Paris Aden.

Liquidity means “readily exchangeable for cash.” Its evil twin illiquidity means “not readily exchangeable for cash without a substantial loss of value.” To picture illiquidity, imagine the NASA crawler, the largest self-powered vehicle in the world. Custom built to move Apollo rockets to the launching pad, the crawler was operated by a team of nearly 30 engineers, technicians and drivers. Although the crawler is valuable, it would be hard to quickly find a willing buyer not named NASA.

This snapshot provides an overview of the Auto Parts and Equipment industry through the second quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

Click below to open the full report.

This snapshot provides an overview of the Building Products industry through the second quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

Click below to open the full report.

This snapshot provides an overview of the IT Services industry through the second quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

Click below to open the full report.

This snapshot provides an overview of the Packaged Food and Meats industry through the second quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

Click below to open the full report.

This snapshot provides an overview of the Construction and Engineering industry through the second quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

Click below to open the full report.

The key measure of financial success for a business owner is value creation. Shareholder value is created when the return on invested capital in the business exceeds that business’ cost of capital. We find that owners of mid-sized businesses often have ample high-return investment opportunities that are not pursued because they perceive capital to be scarce. Shareholder value creation often suffers as a result. Read on for our views on why debt is the indispensable value creation tool.

Conditions in the credit markets are at an all time high for borrowers. Increasing amounts of capital is available for growth, acquisitions, and shareholder liquidity. For companies in the Canadian middle market, information on the type, amount, and terms associated with the capital is nearly impossible to find. Running a competitive financing process and canvassing a full compliment of lenders is the best way to your optimizing your liquidity and flexibility from debt, however that can sideline a finance team for 5 months. What is one to do? Read on…

Back in early-March, we teamed up with Pierre Ouimet, Head Investment Strategist at UBS Bank (Canada), to put together our Annual Outlook on the Canadian economy. The report covered a range of topics pertinent to Canadian business owners, from ongoing NAFTA negotiations to the sweeping reform brought about by the U.S. Tax and Jobs Act. A few months later, we’ve checked back in with Mr. Ouimet to discuss the quarter that was, while also considering issues that stand to impact the rest of 2018.

This snapshot provides an overview of the Building Products industry through the first quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

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This snapshot provides an overview of the Air Freight & Logistics industry through the first quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

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This snapshot provides an overview of the IT Services industry through the first quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

Click below to open the full report.

This snapshot provides an overview of the Packaged Food & Meats industry through the first quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

Click below to open the full report.

This snapshot provides an overview of the Construction & Engineering industry through the first quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

Click below to open the full report.

This snapshot provides an overview of the Auto Parts & Equipment industry through the first quarter of 2018, highlighting industry performance, acquisition activity and key industry trends.

Click below to open the full report.

This is Part 2 of a 2 part series. The series provides an in-depth explanation of the market cycle in the economy, how it works and where we are today. We will also provide some practical advice about what happens to businesses in a market correction and what you can do to board up the windows and prepare.

Richard Branson is a highly charismatic entrepreneur who has started 400+ businesses and has almost 11 million followers on LinkedIn. His celebrity leads many to conclude that his personal brand is more valuable than the Virgin brand. This is a dangerous sentiment though and a common trap for many entrepreneurs. The trap is that if all the value is in the owner, then one day you will wake up to find that you have a business you cannot sell.

Canadian Auto Parts SMEs are at a crossroads, facing intense competitive pressure from increasing investment in Mexico, NAFTA uncertainty, and a looming invasion from Chinese car makers. The following article from the Auto Parts Manufacturer's Association (APMA), written by Joe Atikian in collaboration with Valitas, lays out the challenging competitive environment facing Canadian Auto Parts SMEs and discusses the options Canadian business owners must consider in order to remain competitive.

In case you missed it, our most recent publication reviewed Canadian M&A activity in 2017, a year that saw an abundance of deals nationwide and exhibited a near 10% uptick in transaction volume relative to 2016. This week, we look ahead to the rest of 2018, drawing on the insights of Pierre Ouimet, Executive Director and Head Investment Strategist at UBS Bank (Canada), to highlight key factors that we see impacting the Canadian business landscape in the coming months.

To read our full article, click "Open in Browser" below.

There are creative ways to provide financing to your business beyond traditional bank loans and real estate mortgages. In owning real estate, many business owners are sitting on a potentially undervalued asset that could provide much-needed liquidity to their companies. With the significant increase in value of commercial and industrial real estate over the past decade, the value of these assets is often much higher in the hands of specialized real estate investors than in the hands of business owners.

This week’s article discusses the advantages and disadvantages, market factors and ideal situations for sale leaseback transactions.

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Valitas presents to you a one-of-a-kind, holiday-themed acquisition opportunity. In an unprecedented move, Santa is canvassing all interested buyers for a potential sale of his historic workshop.

Please click "Open in Browser" to determine if this opportunity is for you.

It is often difficult for private sellers to obtain information on M&A advisory fees. Fortunately, in 2016, Divestopedia and Firmex reported on the results of an inaugural survey that shed light on this topic, and their 2017 report has recently been released. The report concludes that, consistent with Susan’s experience, there isn’t one single industry standard, and that fees vary by structure, size, and terms. To gain additional perspective on this topic, we spoke to John Carvalho, President of Divestopedia, who shared some of his insights.

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When business owners consider a sale of their company, a common first question is: “How much is my company worth?” The answer is guided by the elements that buyers look for when they assess the value of a business. So, from a buyer’s perspective, what makes a company an attractive acquisition target?  

A recent study by Intralinks and the M&A Research Centre at Cass Business School in London provides some answers to this question. Additionally, Paul Eldridge, a partner at Fulcrum Capital Partners, shared insights with us, gleaned from his extensive experience as a private equity investor. 

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As NAFTA negotiations proceed in Washington D.C., Canadians across the country are paying close attention to how an overhaul of the trade agreement could impact their businesses.

One key issue that needs addressing is that of supply chains. Many industries, like automotive, have structured their supply chains to take full benefit of free trade with Mexico and the U.S., thus creating complex, integrated supply networks.  With input from Flavio Volpe, President of the Automotive Parts Manufacturers' Association, we consider how a different NAFTA could impact supply chains, and what companies can do to address their supply chain vulnerabilities.

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While M&A transactions are driven by an assortment of reasons, the realization of synergies is omnipresent. An acquirer’s focus, post-merger, is more frequently on cost synergies, as they are more tangible and easier to achieve than revenue synergies. In fact, a recent Mckinsey article Merge to grow: Realizing the full commercial potential of your merger revealed that revenue growth of companies involved in large merger deals tend to decline post-transaction.  And while many companies do expect revenue synergies to comprise a significant component of total deal synergies, less than a quarter report achieving 80% of their target[1].

According to Tim Morton, Managing Partner at Prompta Consulting Group, and an expert on post-merger integration:

“Far too often the M&A focus is on achieving cost synergies, [and] the culture, people, processes and ways of working are often overlooked. It’s paramount for companies to have a clearly planned vision of success to support the achievement of M&A revenue synergies.”

So how to get the most out of your merger? Read our full article to find out.

You’ve spent years, decades even, building your business.  And along the way, you’ve figured things out, learned from your mistakes, and realized success.  Now you’re ready to consider an exit strategy; maybe you’re thinking about selling imminently, or in the next five years.  You have friends and colleagues who have gone through this. Some have hired M&A advisers, while others opted to do it themselves, as they’ve always done, avoiding the advisory success fee in the process. 

What should you do?  Does an M&A adviser create tangible value in a sale of business, or given the associated fees, and the knowledge you have of your industry, does it make more sense to do it yourself?

Last month, we considered whether business owners who hired M&A advisers to manage their sale process received a higher sale price than those that did it themselves. We reported on an independent study of sale prices received by more than 3000 private sellers, which concluded that private sellers retaining advisers receive an acquisition premium of 6-25 % over those that do not.  But why do adviser-assisted sellers get that acquisition premium?  And what is the net effect after advisory fees are factored in?  We try and answer those questions this week.

Please click "Open in Browser" to read our full article.

You’ve spent years, decades even, building your business.  And along the way, you’ve figured things out, learned from your mistakes, and realized success.  Now you’re ready to consider an exit strategy; maybe you’re thinking about selling imminently, or in the next five years.  You have friends and colleagues who have gone through this. Some have hired M&A advisors, while others opted to do it themselves, as they’ve always done, avoiding the advisory success fee in the process. 

What should you do?  Does an M&A advisor create tangible value in a sale of business, or given the associated fees, and the knowledge you have of your industry, does it make more sense to do it yourself?

As an M&A advisory firm, we recognize that our own views on these issues would (rightfully) be perceived as biased, so we sought out independent sources to provide answers.   While we found several relevant discussions and papers, the most compelling, because of the authors’ independence and the significant sample size examined, was a research paper from the University of Alabama that specifically considered whether “Hiring M&A Advisers Matter[s] for Private Sellers”.

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Know your Buyers is a three-part series by Valitas Capital Partners for business owners. It is designed to help owners consider the types of buyers that are in the market, how those buyers perceive value, and the advantages and disadvantages associated with each.

In previous instalments of the series, we discussed financial and strategic buyers. This month, we present different business scenarios and how the type of buyer impacts the outcome in each case.

Know your Buyers: Part 3

Christine Spence and Murray Brown own thriving commercial bakeries. 

Both spent decades building their businesses from corner shops to the factories that house their current operations today. 

Both generate healthy revenue and cashflow, at a level that might make their competitors envious. 

Both are still working long, tough hours…maybe longer and tougher than they’d like (particularly in Murray’s case).

And while both have adult kids, the kids have gone in different directions, and have no interest in the commercial bakery business.

Those are their similarities, and here are some critical differences…

Murray is 72 years old.  He’s tired of the long hours, and wants freedom to spend winters in the Florida sunshine, take up golf, and enjoy time with his grandkids. He’s ready to realize the value from what he’s built over the past decades and have someone else take over the business.

Christine just turned 60.  This milestone birthday has triggered some thinking about how she wants to spend the next decade.  Further thinking has been provoked by her long-time business partner, who recently announced that she wants to sell her 30% stake in Christine’s bakery.

What will generate the most successful outcomes for Murray and Christine?

Please click "open in browser" to read the full article and find out.

Know your Buyers is a three-part series by Valitas Capital Partners for business owners. It is designed to help owners consider the types of buyers that are in the market, how those buyers perceive value, and the advantages and disadvantages associated with each.

In this instalment of the series, Valitas discusses strategic buyers. Last month, we explored financial buyers and, in June, Valitas will present different business scenarios and how the type of buyer impacts sale strategy and the outcome in each case. Read our full article to find out more.

Know your Buyers is a three-part series by Valitas Capital Partners for business owners. It is designed to help owners consider the types of buyers that are in the market, how those buyers perceive value, and the advantages and disadvantages associated with each.

In this instalment of the series, Valitas discusses financial buyers. In May, we will explore strategic buyers and, in June, Valitas will present different business scenarios and how the type of buyer impacts sales strategy and the outcome in each case.

A recent McKinsey article crossed my desk this week.  The article highlighted value creation inherent in organic growth versus growth by acquisition.  The author noted that over a 15-year period, companies with more organic growth generated higher shareholder returns than those relying heavily on growth by acquisition.  What is the explaination behind? Where does this leave us? Read our full article to find out more. 

“NAFTA is the worst trade deal maybe ever signed…”  The pervasive “trumpeting” of that rhetoric was heard throughout the recent U.S. election campaign.  Finger pointing about unfairness in the context of North American trade was primarily directed at Mexico, with Canada sitting quietly on the sidelines.  And, in fact, since the new administration has taken the reigns, there have been assurances that Trump is happy with the trade relationship with Canada. 

But what does that mean? Read our full article to find out more. 

When buyers consider an acquisition target, the focus is typically on strategic fit and valuation. The subsequent due diligence process is used as a security blanket to validate the buyer’s vision of the target.  However, the typical due diligence checklist doesn’t address the subjective areas of the business – those involving people, culture and processes – that are often the source of post-acquisition surprises.

Read our full article to find out more. 

Fact:    Private Equity (PE) portfolio companies outperform public companies, whether performance is measured by return on investment or EBITDA growth.

Do the value creation principles employed by PE firms also apply to business owners?  

Read our full article to learn more...

Is Corporate Canada sitting on mountains of “dead money” rather than investing it productively? Mark Carney, former Bank of Canada governor, famously stated so back in 2012, suggesting a level of caution amongst business leaders that “could be regarded as excessive”.  Carney worried that this excessive caution, or lack of courage, would limit Canada’s ability to compete in the global economy. Read our full article to find out more. 

Considering your strategic options? Is concern about confidentiality holding you back?  See how we've been able to complete dozens of transactions without a single leak.

Most deals look great on paper – openly supported by senior analysts who tout tremendous value, complementary offerings or services, and large synergies from combined organizations.  These financial and strategic gains, however, rarely materialize as stated without a post-merger integration plan that outlines the strategies and tactics for seamless execution.

See how Valitas navigated a complex insider bid process, cutting to the core issues quickly and with minimal disruption to the business, to provide a fairness opinion in 10 days.

In every sale transaction, there is a “window of vulnerability” for the seller that starts with the initiation of sale discussions with a potential buyer and ends with the closing of the sale. Three key risks present themselves during this window. A key objective of any effective sale process is to shorten this window of vulnerability as much as possible.

Early Bird Registration Deadline is April 19, 2017.  Use code SPONT1720 to get an additional 20% off the posted rate.

Paris Aden is moderating a panel discussion at the Business Transitions Forum Program in Toronto on May 16, 2017.  The panelists include some of Canada’s leading M&A professionals:

Devon Cranson, Founder & President , Cranson Capital Solutions Inc.

Mario Nigro, Partner, Stikeman Elliott LLP

Maria Severino, Partner, Collins Barrow Toronto LLP

Vince Simonelli, Partner, Granite Partners LLP

Bill Zinger, Founder, Kissner Milling Company Limited

The panel will discuss a critical component for any successful business transition: how to select the ideal exit team when you sell your business. 

The successful sale of your business involves many moving parts, making it the largest and possibly the most complicated transaction of your life.   You can’t do this alone, you will need a team of professionals to help you successfully sell your company. The right team will get you the best price, terms and most importantly, ensure that the transaction closes.

After attending this session, you will understand what the ideal exit team looks like and how to select the best advisors for your business. You’ll also learn what your exit team will cost and how they’ll be paid.

Early Bird Registration Deadline is April 19, 2017.  Use code SPONT1720 to get an additional 20% off the posted rate.

Paris Aden is moderating a panel discussion at the Business Transitions Forum Program in Toronto on May 16, 2017.  The panelists include some of Canada’s leading M&A professionals:

Devon Cranson, Founder & President , Cranson Capital Solutions Inc.

Mario Nigro, Partner, Stikeman Elliott LLP

Maria Severino, Partner, Collins Barrow Toronto LLP

Vince Simonelli, Partner, Granite Partners LLP

Bill Zinger, Founder, Kissner Milling Company Limited

The panel will discuss a critical component for any successful business transition: how to select the ideal exit team when you sell your business. 

The successful sale of your business involves many moving parts, making it the largest and possibly the most complicated transaction of your life.   You can’t do this alone, you will need a team of professionals to help you successfully sell your company. The right team will get you the best price, terms and most importantly, ensure that the transaction closes.

After attending this session, you will understand what the ideal exit team looks like and how to select the best advisors for your business. You’ll also learn what your exit team will cost and how they’ll be paid.

Are you thinking about selling your business now or in the future? Know Your Buyers helps business owners consider the types of buyers that are in the market, how those buyers perceive value, and the advantages and disadvantages associated with each. Additionally, a real-life scenario provides practical application.