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Canadian Market Recap: October 2017

  • Posted By: Karen Fisman, Andrew Schmidt, Miranda Li, Ty Wilson, JT Paliwal, Paris Aden

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  • Comments: 0

 

Market Update

One hundred and eighty-two Canadian M&A transactions closed in October. Year to date, M&A closed deal count is 3.4% higher than the comparable period in 2016. The Canadian dollar depreciated relative to the U.S. dollar by 1.17 cents, ending the month at 79 cents. WTI Crude oil prices rose by 7.1% in October, ending the month at $55.64 per barrel.

Valitas Insights: Making Sense of Private Market M&A Advisory Fees

Susan Thompson decided it was time to sell her company. She’d started out thirty years before as a one-person shop, and through sweat and perseverance, had built the business to $20 million in revenue, with a healthy EBITDA of $5 million. Being of a certain age, Susan had entrepreneur friends that had sold their businesses. Some hired M&A advisors to facilitate, and others didn’t. Those that hired advisors seemed to have an easier time getting through the process, including selling at a price they were happy with[1].

Through referrals from friends and colleagues, Susan compiled a short list of three boutique M&A firms. She met with each, and was pitched on the virtues and fee expectations of the respective teams. She was surprised to find that each firm suggested a different fee structure.

All three of the advisors came with stellar referrals, and all seemed to have teams she could work with.  Susan needed to think about which fee structure made the most sense for her.

It is often difficult for private sellers like Susan 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.

To learn more, read our full article

 

And on other topics…

Know your bidder – why sell-side due diligence is so critical:  Paris Aden provides answers and insights in Part 2 of his interview with Firmex.  And if you missed Part 1, you can find it here.

 

[1] See University of Alabama study: Does Hiring M&A Advisors Matter for Private Sellers

 

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