Transition Planning Guide - Value Added

pavilion

GUIDE

STRATEGY FOR INCREASING VALUE


TRANSITION PLANNING GUIDE 7


IT’S ABOUT TIME

90 year old rare art deco clock. Manufactured in the 1920’s early 30’s in Europe


WHAT’S INSIDE

VALUE ADDED GUIDE

Begin with the end in mind

2

10 Value Drivers to Sell Your Business for the Highest Price

4

Human Capital Risk and the Impact on Business Value

12

How to Build Reucrring Revenue: A Key to Valuable Business

14

Risk & Rewards - The Million Dollar Questions

16

10 Keys to Preparing Your Business for Sale

18

Fixing Value Drivers

20

Pavilion Factsheet

21

Business Score Card

22

IT TAKES A TEAM

The process of preparing and selling a business is complex and requires a dedicated team

of professionals. Deal success is dependent on having the right team working together to

facilitate the sale process. The team players are different on each transaction:

• Accountant

• Valuation specialist

• Merger & Acquisition lawyer

• Merger & Acquisition specialist

• Marketing team

•Wealth management

Designed and created by Firstbase Business Services (www.firstbase.ca)

Copyright Firstbase 2016

TRANSITION PLANNING GUIDE 1


BEGIN WITH THE END IN MIND

Planning includes not only when and to whom you intend

to sell or transition your business, but also ways to maintain

your company’s value through tax planning and being

prepared for unforeseen events. Through this process, you’ll

gain peace of mind that both you and your company are

ready for transition.

There are several factors to consider when planning to exit or

retire from your business:

• Business partners or key executives

• Your business plan

• Your family situation

• The structure of your company

• Your retirement plans

• Tax laws

• Your health

• Business debt

• Market conditions

Most business owners will only ever sell one business and as

a result of that will not have the experience of the numerous

challenges and pitfalls involving finance, legal and taxation

issues that impact the business sale process and outcome.

Understanding the value of the business in the open market

and ensuring the right mix of elements will lead to the key

objective of maximizing the value on the sale.

THERE IS ONLY ONE SALE THAT MATTERS

Despite plans to exit their firms within the next decade, few

business owners have developed a formal succession plan;

that could greatly diminish their returns on a business sale. It

is vital to plan ahead with the exit planning process several

years in advance to ensure all the key elements are in place.

In this document there are several sections and chapters to

be a guide and resource for business owners to facilitate and

manage the outcome.

WHY DOES IT TAKE A TEAM?

Selling a business is one of the most complex transactions

imaginable and requires a diverse team to enable a

satisfactory result. Deal success requires having the right

team on board including:

• Mergers & Acquisitions Specialist

• M&A Lawyer

• Accountant

Each of these specialists will play a pivotal role to steer your

transaction from concept to completion. It is vital that the

selection process of the team be assessed for their prior

experience in transactions involving Mergers & Acquisitions.

An important element to remember is that the buyer

will have a similar team representing them during the

negotiation process; therefore selecting the best quality of

team members will be a determining factor in achieving the

best value and terms.

“Insanity is doing the same thing over and over again and expecting a different result.”

- Albert Einstein

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TRANSITION PLANNING GUIDE


TRANSITION PLANNING GUIDE 3



10 VALUE DRIVERS TO SELL YOUR

BUSINESS FOR THE HIGHEST PRICE

Evaluate your company through the eyes of a buyer.

Master these 10 value drivers and sell at the higher

range of the multiples normally associated with your

industry.

BUSINESS VALUE - WHAT DRIVES IT?

A valuation is not about determining what a company is worth in the

current owner’s hands; it is about the company’s transferable value.

The purpose of this article is to help you evaluate your company

through the eyes of a buyer. From that perspective we will ask you to

focus on ten value drivers. Each driver is a characteristic of a business

that either reduces the risk associated with owning the business or

enhances the prospect that the business will grow significantly in the

future.

Simply put, the better your performance in these areas, the greater the

selling price of your business. The likely result is that you will sell at the

higher range of the multiples normally associated with your industry.


Pavilion advisors have developed a

process to identify your company’s key

value drivers and prepare an action

plan that will enhance these drivers and

result in less risk to you, and therefore

higher value when it comes time to sell

- Greg Spafford

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TRANSITION PLANNING GUIDE


1

STABLE AND PREDICTABLE CASH FLOW

Think of revenue and the bottom line cash flow of your

business as the first introduction to a buyer. Revenue and

cash flow is the number one attraction. A business with an

established pattern of growth will bring a premium price

when it is sold. The value associated with acquiring the

available cash flow is directly related to risk. The lower the

risk of losing that cash flow in a transfer of ownership, the

higher the price will be to acquire it.

If recurring revenues comprise a material portion of a

company’s overall revenues, the recurring revenue stream

can be valued at a higher level than the non-recurring

revenues. Examples of recurring revenues are maintenance

contracts, monthly support agreements, annual license

agreements, warranties, subscriptions, or other revenue

streams that are contractual and repeating in nature.

Buyers are willing to pay the highest amount when their

perception is that cash flow is predictable and will increase

into the future.


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feugiat tortor. Es malesuada vehicula.

Integer eu eros mi. Nunc placerat vel

eros ac iaculis. Nunc eu tellus sagittis,

auctor sem non, feugiat tortor. Mauris

sed turpis eu tortor malesuada vehicula.

Cum sociis natoque penatibus et magnis

dis parturient montes ascetlus mus.

- John Doe


2

RELIABLE FINANCIAL INFORMATION

Reliable financial records are not only a critical element

of business management but also support the claim that

a company is consistently profitable. In the purchase of a

business, the buyer will perform some level of financial due

diligence. If the buyer is not comfortable when reviewing

the company’s past financial performance, there is no deal,

or at best a reduced value for the company.

If a buyer faces a seller of a business who asserts that the

company has been making $1 million per year for the past

three years and is projected to make at least that much in

the future, the seller will be required to prove it.

If the seller then produces past financial statements that are

incorrect, unsupportable, or incomplete, the buyer would

most likely move on. The lack of financial integrity is one

of the most common hurdles encountered during the sale

process.


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eros ac iaculis. Nunc eu tellus sagittis,

auctor sem non, feugiat tortor. Mauris

sed turpis eu tortor malesuada vehicula.

Cum sociis natoque penatibus et magnis

dis parturient montes ascetlus mus.

- John Doe


“A business is only as good as the sum of its’ parts, which

means you can’t afford to have weak parts.”

- Robert Heller

TRANSITION PLANNING GUIDE 5


3

CUSTOMER DIVERSITY

A broad customer base in which no single client accounts

for more than five to ten percent of total sales helps to

insulate a company from the loss of any single customer. It

reduces the risk of serious cash flow issues if one or more

customers do not stay under new ownership.

4

OPERATING SYSTEMS & PROCEDURES

The establishment and documentation of standard

business procedures and systems demonstrate that the

business can be maintained profitably after the sale.

Business systems include the computerized and manual

procedures used in the business to generate its revenue

and control expenses, as well as the methods used to track

how customers are identified and how products or services

are delivered.

The following are examples of business systems that

will enhance value:

• Personnel recruitment, training and retention

• Human resource management (an employee manual)

• New customer identification, solicitation, and

acquisition

• Product or service development and improvement

• Inventory and fixed asset control

• Product or service quality control

• Customer, vendor and employee communication

• Selection and maintenance of vendor relationships

• Business performance reports for management


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eros ac iaculis. Nunc eu tellus sagittis,

auctor sem non, feugiat tortor. Mauris

sed turpis eu tortor malesuada vehicula.

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mus. Morbi arcu massa, efficitur ac

justo quis, commodo tincidunt libero.

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Vestibulum in gravida elit. a nisl. Mauris

in sollicitudin purus. Sed hendrerit

bibendum lacus et egestas justo

tincidunt eta elit a nisl.

- John Doe


“Buyers are proactive and risk averse. If they discover any

shortcomings during their due diligence investigation in

your value drivers, the penalty will be a significantly lower

enterprise value and reduced terms of sale.”

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TRANSITION PLANNING GUIDE 7


5

GROWTH POTENTIAL

When an owner can describe realistic opportunities for

growth that specifically illustrate the reasons why cash

flow and the business itself will grow after it is acquired, a

higher value can be achieved. A documented growth plan

demonstrates the viability of the company’s future and may

identify opportunities that a buyer has not considered.

Some areas to consider when developing a growth

plan:

• Is your business in a growth industry?

• Are there additional markets that a new owner should

pursue?

• What additional products could be delivered to existing

customers?

• Where are the best profit margins realized and can they

be expanded?

• Can your technology be licensed?

• Will demand for your product or service increase as

population grows?

• How will enhanced marketing campaigns and sales

efforts affect growth?

• Are there opportunities to grow through acquisition?

• Can growth be achieved by expanding territory,

production or distribution capacity?


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eros ac iaculis. Nunc eu tellus sagittis,

auctor sem non, feugiat tortor. Mauris

sed turpis eu tortor malesuada vehicula.

Cum sociis natoque penatibus et magnis

dis parturient montes ascetlus mus.

- John Doe


6

HUMAN CAPITAL/QUALITY OF

WORKFORCE

Keep your talent, they are your business. Buyers look for

situations where management and / or key employees

want to stay for the long term. The quality of the workforce,

including experience, expertise and depth of knowledge, is

also considered.

An in-house team that can provide continuity and assist

in the growth of the business under new ownership is a

valuable asset. If a company’s success is reliant on capable,

well-trained employees - not the owner - it means the

business will not be negatively impacted under new

ownership. This reduction of risk will pay off with an

increased purchase price.


Integer eu eros mi. Nunc placerat vel

eros ac iaculis. Nunc eu tellus sagittis.

parturient montes ascetlus parturient

montes ascetlu mus.

- John Doe


8

TRANSITION PLANNING GUIDE


7

BARRIERS TO COMPETITIVE ENTRY

Features that give a business an advantage over its

competitors, strengthen its strategic position, or can be

leveraged for increased value and lessen perceived risk.

Buyers will pay a premium for a niche that has barriers to

competitive entry.

One way to describe this Barrier Value Driver is to use

Warren Buffet’s term, “Business Moat.” Buffet compares a

castle’s moat to the protection that a business needs to

encroaching competitors. For instance, the wider the moat,

the more easily a castle could be defended. A narrow moat

did not offer much protection and allowed the castle to be

breached. To Buffett, the castle is the business and the moat

is the barrier that protects the business’s competitive edge.

The following are example barriers that widen the moat

and hinder competitors from breaching the company’s

castle.

• Copyrights

• Trademarks

• Patents

• Trade secrets

• Developed processes


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eros ac iaculis. Nunc eu tellus sagittis,

auctor sem non, feugiat tortor. Mauris

sed turpis eu tortor malesuada vehicula.

Cum sociis natoque penatibus et magnis

dis parturient montes ascetlus mus.

- John Doe


• Proprietary designs

• Proprietary know-how

• Brand or trade names

• Engineering drawings

• Customized software programs

• Step-by-step training systems

• Customized or proprietary databases

• Published articles or industry press

• Distribution rights or exclusive agreement / contracts

• Hard-to-get licenses, zoning, permits, or regulatory

approvals

• Contracts with difficult-to-penetrate entities

(government, for example)


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eros ac iaculis. Nunc eu tellus sagittis,

auctor sem non, feugiat tortor. Mauris

sed turpis eu tortor malesuada vehicula.

Cum sociis natoque penatibus mus.

- John Doe


“Cras eget quam faucibus, vulputate arcu eget, condimentum elit.

Morbi arcu massa, efficitur ac justo quis.”

- John Doe

TRANSITION PLANNING GUIDE 9


8

PRODUCT

DIVERSITY

A narrow product set increases risk and drives down value.

Diversity of revenue sources lowers the inherent risk of

the business. Therefore, businesses with a healthy product

mix, good gross profit diversification, or with products

or services sold into multiple industries, receive a higher

perceived value from prospective buyers.

9

FACILITY & EQUIPMENT CONDITION

The business facilities and equipment should be well

maintained to realize maximum value. A buyer will not

pay a premium, and may very well discount an offer, for a

disorganized warehouse, office or other building. Seeing

disorganized or poorly maintained facilities and equipment

may cause the buyer to perceive that other aspects or the

business may be similarly disorganized (employee records,

financial records, compliance records, etc.).

Owners should ensure that facilities and equipment

are organized and maintained in peak condition before

beginning the sale process. Buyers will appreciate that

their investment will not include major repairs and that all

equipment and inventory will be easy to locate and identify.

Lastly, are the facilities large enough and machinery

sufficient to accommodate some level of modest sales

growth? A buyer does not want to have to look for

additional space or immediately invest in new equipment

shortly after closing a deal.


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eros ac iaculis. Nunc eu tellus sagittis,

auctor sem non, feugiat tortor. Mauris

sed turpis eu tortor malesuada vehicula.

Cum sociis natoque penatibus et magnis

dis parturient montes ascetlus mus.

- John Doe


10

GOODWILL

This value driver involves stability and consistency.

Name recognition, customer awareness, history, ongoing

operations, and reputation are all part of business goodwill

and influence value. Even if the company does not have

many hard assets, relationships are key. The fact that

customers have been with the company for a long period of

time does matter.

Brand recognition, service or product reliability, and high

customer satisfaction are distinguishing factors that add

value. This driver of goodwill should not be overlooked in a

valuation because it helps mitigate perceived risk.


Integer eu eros mi. Nunc placerat vel

eros ac iaculis. Nunc eu tellus sagittis,

auctor sem non, feugiat tortor.

- John Doe


10

TRANSITION PLANNING GUIDE


TRANSITION PLANNING GUIDE 11


HUMAN CAPITAL RISK AND THE

IMPACT ON BUSINESS VALUE

When a business is being evaluated by a prospective buyer

as a possible candidate for purchase, the quality of the

human capital will be considered. The employees are a major

component and the backbone of any successful business

operation.

Any aspect that reduces risk in the continuity of the business

under new ownership adds value. A stable, skilled, quality

workforce is one of the top value drivers that contributes to

the purchase price of a business for sale.

It is important that as the business owner, you keep your

key employees happy, as they make your business what it is.

Buyers look for situations where management and / or key

employees want to stay for the long term.

The quality of the workforce including: experience, expertise

and depth of knowledge will be considered. An in-house

team that provides continuity and assists in the growth

of the business under new ownership is a valuable asset.

If a company’s success is reliant on capable, well-trained

employees — not the owner — it means the business will not

be negatively impacted under new ownership.

REDUCING THE HUMAN CAPITAL RISK

Human capital refers to the stock of competency, knowledge

and personality attributes embodied in the workforce that

has the ability to produce economic value. A workforce that

can lead to increased production, innovation and good word

of mouth advertising is more valuable and less risky than one

with lack of job performance and high employee turnover.


12

Use the checklist to help you

assess the human capital risk in

your business. A business owner’s

efforts to build a stable, skilled,

quality workforce will pay off

with an increased purchase price

for their business.

TRANSITION PLANNING GUIDE


In analyzing risk, as far as labor is concerned, the following

are key areas that should be considered:

4 The availability of a qualified labor pool. Are potential

employees hard to find, or is the labor pool adequate

for the skills required if employees need to be replaced

or added?

4 What are the ages of the employees and key

management? If many of the key managers are close

to retirement age, they may just retire when ownership

changes.

4 What is the liability risk with the employees? Have

the employees been trained sufficiently in safety

procedures?

4 Is safety an ongoing program for the employees? If

the company has delivery vehicles, a check of accident

history would be in order.

4 Has management been efficient? Are they up to the

challenges of the future? Do they have the education or

expertise to take the company to the next level?

4 Who is responsible for the majority of sales? Does the

company have a sales force or is the owner responsible

for most of the sales and if so, how hard would it be to

replace the owner?

4 Do you have a human resources policy and procedures

manual in place?

4 Does all of the staff have job descriptions?

4 Who is responsible for performance assessments and

reviews?

4 Do you have an organizational chart?

4 What training systems do you have in place for key

positions?

4 What metrics are in place to measure the moral of the

employees?


TRANSITION PLANNING GUIDE 13


HOW TO BUILD RECURRING REVENUE:

A KEY TO A VALUABLE BUSINESS

Recurring revenue is the Holy Grail for business owners looking to have

a valuable and desirable company.

A customer base with a subset of recurring revenue that is contractual

and repeating in nature increases the probability that the business will

have stable, predictable revenues and cash flow into the future.

From a buyer’s perspective, this reduces future risk and therefore

enhances perceived value. The value associated with acquiring the

available cash flow is directly related to risk.

Although all recurring revenue will have a positive impact on business

value, some forms are more desirable than others. Here is a list of the

types of recurring revenue in an order from good to best:

CONSUMABLES

If you sell a consumable product, whether it is diapers, commercial

cleaning supplies, or office supplies, start tracking your repurchase rate

from existing customers. This will be a number that buyers will use to

calculate your projected sales into the future — and to calculate how

much they’re willing to pay to buy your company today.


Recurring revenue is the Holy

Grail for business owners

looking to have a valuable and

desirable company.

- Rose Stabler


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TRANSITION PLANNING GUIDE


SUBSCRIPTIONS

Even better than having loyal customers who repurchase is having revenue that is guaranteed into the future.

For example, loyal subscribers to magazines, newspapers, and other publications get a renewal letter each year

and pay upfront for the next 12 issues. They make the conscious decision to renew into the future for a certain

period of time.

Automatically renewed subscriptions are even more attractive than periodic renewals because they require

a conscious decision to cancel rather than renew. For example, Mozy.com automatically backs ups office

computers online on a daily basis and charges a fee each month. This subscription service has no end date

unless the client tells them to stop providing the service. By tracking historic cancellation rates, revenues can be

predicted well into the future, which is why these types of revenue streams enjoy higher valuations.

CONTRACTS

The only thing more valuable than an automatic renewal subscription is a hard contract for a defined term.

Wireless cell phone companies come to mind as one of those industries that push hard to get you on a multiyear

contract. When a company is acquired, the owner and some employees may leave after the acquisition,

however customers with plenty of time remaining on their contracts are security for the acquirer. As you ascend

the recurring-revenue hierarchy, the value of the business will go up accordingly.

RECURRING REVENUE MODELS FOR YOUR BUSINESS

Do you think that recurring revenue is tough to achieve in your business? Here are some examples of recurring

revenue models:

• Maintenance contracts

• Annual license agreements

• Warranties

• Subscriptions

• Landscape maintenance companies

• Pool service companies

• Janitorial companies

• HVAC companies that perform routine maintenance of

equipment

• Accounting firms that provide annual tax return preparation and

audits

• Security firms that monitor home and commercial businesses on

a monthly basis

• Software companies that provide annual user support and

software upgrades for a maintenance fee

BENEFITS OF RECURRING REVENUE

The recurring revenue customer base you build for your company will:

• Increase the probability that you will have stable revenues and cash flow

• Decrease future risk in the mind of a potential buyer

• Provide you with an opportunity to sell additional products or services to your existing customer base

• Keep you more attuned to your customer needs while helping you ward off competition

• Provide a corporate buyer with the opportunity to cross-sell its products to your customers

• Provide a justification for a higher sales price of your business

“Ensuring your company has a predictable and stable revenue base will mitigate

risk in your business and leads to a much higher valuation.”

TRANSITION PLANNING GUIDE 15


RISKS & REWARDS

RISKY BUSINESS – AVOIDING THE PITFALLS

Advisors don’t like to talk about risk. They’d much rather talk about how

much money their clients will make when their advice produces positive

returns. And it’s been easy making money when their clients are unaware

of their options.

WHAT CIRCUMSTANCES LEAD TO A SHORT-

SELL?

Many advisors are seeking to diversify their revenue streams and

entering the Mergers & Acquisitions arena. In many instances, because

the business owner has worked closely with these advisors for years or

decades; the client is of the opinion that they are able to sell the business

in the most effective manner.

The final sale result is underwhelming, the advisors’ firm sells the clients

business to the best of their ability and the outcome results in a lesser

sum than the business enterprise is worth (i.e. a short-sell).

In most instances, this involves millions of dollars ($1M’s) are left on the

table; resulting in a short-sell.

IT’S ALL ABOUT VALUE

The Pavilion approach to valuation is comprehensive and distinctly

different than any other advisor. Primarily because, we review the

strategic combined value and multiplies it, offering maximum return for

the client.

A sound valuation will be based on all the relevant facts including the

elements of common sense, informed judgment and rationally which

must enter into the process of weighing those facts and determining

their combined or cumulative significance.


CAUTION & RISK

Traditional approaches for selling

a company involves little sales or

marketing activity, resulting in a

short sale for the client.

There is an over-reliance on word of

mouth and networking connections

from third-party advisors that

fail to deliver a sale structure and

offers that are in the best interest of

the business owner.


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TRANSITION PLANNING GUIDE


REWARDS

Pavilion has acted for many respected businesses to structure and

execute significant corporate financial transactions in the mid-cap

marketplace. The advantages of working with Pavilion include:

4 Access to objective advice, professional insight and judgment

4 A strategic partner that keeps our best interests in mind

throughout the transaction

4 Essential market intelligence both locally, nationally and globally

4 Maximize the transaction value

4 Access to pre-qualified investors and strategic buyers

It’s a proven fact, Pavilion has the skills, talent and know-how to

achieve a significantly higher selling price than any other organization

in Western Canada.

AVOIDING THE PITFALLS

What is the difference between a company that is sold versus bought?

It’s a fact that most business owners will only sell one significant business in their lifetime. The process of selling

a business is complicated with many concurrent moving parts. Selecting the right partner in the selling process

will make a significant difference in the outcome, as outline below.

CASE STUDY

In a recent example – a mid-cap client worked closely with their highly reputable top tier advisors for over 15

years. The advisors conducted the valuation and stated that they can sell the company for an estimated value of

$12 Million.

Pavilion was asked for a second opinion and we ascertained that the business was worth nearly $20 Million.

The “sold company” refers to a business where the transaction has been completed by an inexperience firm or

advisors without the capacity to generate significant competing bids, as detailed below:

Target enterprise value

The Sold company (other advisors)

$12 Million

The Bought company (The Pavilion Process)

$19 Million

Number of bidder enquiries 29

132

Shortlisted bidders in negotiation 5

19

Successful bidder $ 9.5 Million $16.5 Million

$7Million

Difference in sale value

The bought company had significantly more buyer enquiries and resulted in more

competition and enabled an improved outcome for our client. The Pavilion fee

was paid for many times over and the client got the increased value they deserved

for their years of hard work.

TRANSITION PLANNING GUIDE 17


10 KEYS TO PREPARING YOUR

BUSINESS FOR SALE

As a result of the growing number of baby boomers, many business owners are considering how to prepare their

business for sale. For some, this simply means sprucing up their operations with cosmetic improvements. For

others, the following steps are necessary to ensure the goal of selling one’s business can be fulfilled.

1) Determine if now is the right time to sell – A business valuation involves many variables, (and many of

them are subjective), that often means various “experts” looking at the same company and formulating

different recommendations. However, many small and medium-sized companies are sold for prices

expressed as a multiple of cash flow or earnings. Each industry has a “rule of thumb” and an expected

multiple that buyers will pay. If the business’s current financial picture doesn’t match your expectations,

one or the other has to be adjusted.

2) Know your reason for selling – This is one of the first questions a buyer will ask, so you need to be able

to articulate your motivation. Your answer needs to be honest, and ideally, shouldn’t express any urgency.

Buyers would expect to hear things like retirement, moving out of town or pursuing other non-related

business interests. Red flags are raised if the answer seems ambiguous and unsure. This is why it’s better to

sell when times are good rather than waiting until they aren’t.

3) Get your books in order – Prospective buyers will want to see at least three years of financial statements,

including balance sheets and income statements. You will need to be able to document your business’s

true profitability by identifying non-operational expenses (e.g. personal auto lease and medical fees).

Sellers need to quantify and substantiate these items because, at the end of the day, buyers purchasing a

business are really buying into its profitability.

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TRANSITION PLANNING GUIDE


4) Make sure all legal commitments are in order – This means reviewing your permits, leases, client and

vendor contracts, etc. and understanding their impact on the business. For example, if the business

location is critical to its performance, a long-term lease with options at or below fair market value would

be appealing to a buyer. If client contracts, particularly large key clients, are coming due for renewal,

buyers would find this less appealing as the risk of a non-renewal is much greater immediately following a

transfer of ownership.

5) Don’t be a business owner who does it all – Some businesses can’t survive without the owners trying to

do everything themselves. They have a shortage of key employees to help manage operations. Buyers may

be concerned if they themselves can’t replace the skills and experience of the owner. If you are absolutely

vital to the business, efforts should be made to gradually delegate key responsibilities to various staff

members. A business that is excessively dependent on the current owner increases the risk in the eyes of a

prospective buyer.

6) Put yourself in the buyer’s shoes – When a buyer comes out to see your business for the first time, it’s

important to make a good first impression. Spotless office spaces, clean machinery, orderly desks, pleasant

and smiling staff and vibrant activity are ways to leave a positive impression. Buyers look for companies

that show well because this can often be indicative of an orderly run business.

7) Integrity is important – The common thread running through all of these steps is credibility. If you want

buyers to move forward, you must show respect by being open, honest and accurate about all things,

both good and bad. This starts with the information that is shared to summarize your business, but is

imperative with all documentation and dialogue exchanged, and will be critical in due diligence through

closing to ensure the transfer stays on track.

8) Prepare and plan thoroughly – Although preparation might seem time-consuming, many owners

find that taking the above steps not only improves their management practices, it can also improve the

desirability and value of their business. Additionally, when a buyer makes an acceptable offer, the initial

preparation helps the deal close quicker.

9) Assemble a team of professionals – The process of selling your business requires the expertise of

specialists who have years of experience in their respective fields. The team you need will include:

• Mergers & Acquisitions / Business Broker

• Tax Specialist

• Accountant

• Lawyer

While each of these specialists charge a fee or commission, they will provide knowledge, expertise, save

you stress, time and add value to the ultimate amount of money completed on the sale. As a result, this

allows the business owner to stay focused on the business during the sale process, which typically can last

from 6 to 24 months.

10) Start early – Getting underway several years in advance can make a considerable difference to the end

selling price. Meet with your Mergers & Acquisitions Specialist at the earliest opportunity and engage

them to assemble your team of professionals.

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FIXING VALUE DRIVERS

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TRANSITION PLANNING GUIDE


PAVILION FACTSHEET

OVERVIEW

Pavilion Business Services is an independent Mergers & Acquisitions (M&A)

advisory firm operating and serving Canada’s small to mid-cap market.

Pavilion provides specialized advice to management teams of publicly and

privately-owned businesses. Pavilion’s team of experts is comprised of M&A

Specialists, Business Consultants, Succession Planners, Valuation Experts and

Marketing Specialists. Our team provides advisory services in the areas of:

• Succession / exit planning

• Mergers & Acquisitions

• Raising capital

• Business valuations

• Corporate restructuring

• Business growth strategies

Pavilion specializes in working with companies and organizations with

typically $2 million – $500 million in annual revenue.

CORPORATE INFORMATION

• Serving clients across Canada

• Attracting strategic and investment buyers across the

globe

• Financial analysis specialists

• Access to domestic, national and international markets

• Skilled and experienced negotiators

INTERNATIONAL BUYERS

Pavilion’s extensive networking partners allow us to provide

business advice on an international scale with direct access

to buyers and investors in over 120 countries. We work with

professional equity, strategic buyers and investment firms

from USA, Europe, Middle East, China and Australia.

North America is increasingly being regarded as the

preferred location for business investments. Established

businesses with a solid cash flow are in huge demand from

buyers around the world.

ADVANTAGES OF WORKING WITH A

MERGERS & ACQUISITIONS ADVISOR

Pavilion has acted for many respected businesses to

structure, negotiate and execute significant corporate

financial transactions and has successfully completed

numerous transactions in the mid-cap market space.

The advantages of working with Pavilion include:

• Access to objective advice, professional insight and

judgment

• A strategic partner that keeps your best interests in mind

throughout the transaction

• Essential market intelligence both locally, nationally and

globally

• The ability to maximize transaction value based on our

experience and track record

• Access to pre-qualified investors/buyers

PHILOSOPHY

The Pavilion management team instinctively knows that great companies are built on the principle of doing the right thing each

and every day, and treating business partners, customers, and employees honestly, fairly and with respect.

KNOWLEDGE » INTEGRITY » RESULTS

TRANSITION PLANNING GUIDE 21


THE BUSINESS SCORE CARD

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TRANSITION PLANNING GUIDE


TRANSITION PLANNING GUIDE 23


With vision and imagination,

we sell your business for maximum value.

(Image of Pavilion Business Services’ reception area)

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TRANSITION PLANNING GUIDE


TRANSITION PLANNING GUIDE 7


DIVESTITURE » SUCCESSION » EXIT PLANNING » SELL

1.888.859.5388 | www.pavilionservices.com

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