When it comes to brokering a deal, Ilan Jacobson has pretty much seen it all.
The chief executive officer of FirePower Capital — a venture capital firm and one of Canada’s fastest-growing independent investment banks — has helped dozens of entrepreneurs successfully sell their business.
He’s also seen virtually every way in which a deal can go, well, sideways.
“We’ve seen a lot of different situations — the good, bad and especially ugly,” says Jacobson, an entrepreneur himself, who owns a few companies himself.
In short, he has seen his share of deal-breakers and, along the way, garnered plenty of know-how on how to avoid them.
That’s largely why Jacobson is one of the chosen experts to present at the third annual Business Transitions Forum taking place in Toronto on May 1.
“This is the ideal event for business owners that want to learn how to add value to their business and ultimately learn how to sell, exit or transition their business as smoothly and profitably as possible,” says David Tyldesley, vice-president and co-founder of Cube Business Media Inc, the company behind the three-day event.
In past years, many of the presenters have been successful entrepreneurs who have sold one or several businesses. This year Jacobson joins the lineup, bringing an in-the-trenches track record of closing deals, and the problems that can arise and ultimately cause them to fall apart.
Undoubtedly his insights are in high demand, Tyldesley says, because selling a business is the most complex transaction an entrepreneur will undertake. In fact, entrepreneurs are more than likely to encounter a roadblock or two.
Ilan Jacobson, chief executive officer of FirePower Capital, will speak at the Business Transitions Forum on May 1.
“Of all the businesses that go up for sale (in a year), only about 20 per cent actually sell,” Tyldesley says, pointing to a recent report by the U.S‑based Exit Planning Institute, a provider of education, networking and professional development.
“Why is that? Well, it’s because the average business owner is not prepared for how complex and risky the process can be.”
That’s where deal-makers like Jacobson can help, offering entrepreneurs who are considering the sale of their business advice on how to navigate the sale process while avoiding common deal-breakers such as how to define working capital.
Often buyers and sellers clash over how much working capital should be left in the business to ensure it can smoothly operate out of the gate.
For example, buyers may determine that working capital is too low, and cut the price they are willing to pay during negotiations by the amount of the shortfall. In many circumstances, that can make a big dent in the cash paid to the entrepreneur on close.
“That realization can make sellers very angry,” Jacobson says.
And those hurt feelings have led to deals falling apart. Fortunately, most pitfalls can be avoided with proper planning and guidance. Of course, the catch is you need to know what you’re planning to avoid.
Other barriers Jacobson will discuss concern sloppy financial reporting and underestimating liabilities. But it’s not just about numbers. It’s also about managing expectations and emotions.
“For many entrepreneurs, their business is their baby, and that can stand in the way of concluding a good deal,” Jacobson says.
“No business is perfect, and buyers will find those warts, so have plans to deal with them,” he says. “Because, at the end of the day, it’s your preparation — the ability to put your company in front of the right buyers and tell them a sound story — and negotiation that will ultimately make or break a deal.”
For more information on the Business Transitions Form, visit businesstransitionsforum.com/Toronto.
This story was created by Content Works, Postmedia’s commercial content division, on behalf of Business Transitions Forum.
BY JOEL SCHLESINGER, POSTMEDIA CONTENT WORKS
ORIGINALLY PUBLISHED: MAR 21, 2018
ORIGINAL LINK HERE