A Sale on the Horizon?

Preparing to sell a business? We have identified the situations that represent ideal times for you to consider exiting your business.

Moving on to other projects or retiring

The classic reasons to sell, it may just be that time for you. It’s important to not wait until the business stagnates or is in decline. Planning for retirement or moving on never starts too early, and once you decide to go ahead, it always takes longer than you anticipated.

Joining a larger organization to get your company to the next level

You may have a product line that could do well in an overseas market, or a new technology that could generate significant sales in a new vertical, but you don’t have the financial resources, the brand recognition, the boots-on-the-ground capabilities to enter a new geography, and so on.

Capitalizing on favourable M&A dynamics in your industry

You may observe that deal-making is starting to heat up in your industry, with strategics and private equity showing unusual interest in acquiring market share, new technologies, talent, etc. Prices tend to rise in these circumstances, and you may consider an exit during these auspicious times.

De-risking: share some of the risk with new ownership

It may be time to consider selling a majority stake in your business to a buyer who can participate in and even lead the growth of the business, with your continued support, allowing you to “take some chips off the table”, and diversify your assets for you and your family.

Addressing an unsolicited offer from a potential buyer

You have received interest from one or even a few buyers. Buyers try to move in on targets on their own, as to avoid an auction in which they’d have to compete. Addressing that offer on your own carries a significant risk of leaving dollars on the table.

What we look for:

  • $10 – $150m in size (enterprise value), though we have advised exceptional companies on either side of that range
  • Cash flowing for traditional businesses; for businesses in emerging sectors that are not cash flowing, value to strategic buyers must be evident
  • Late-stage growth or well-established companies (we avoid pre-revenue start-ups, or distressed situations)
  • Active in industries where M&A is occurring (with some exceptions, like resource extraction, pharmaceuticals and life sciences, which we avoid)
  • Have compelling and differentiated product or service offerings
  • Have a solid management team in place, especially if the owner(s) is retiring
  • Have a strategically sound reason to exit

 

Market Insights
From the archives: May 2017

How Do You Prepare For A Sale of Your Company?
Every entrepreneur must eventually transition out of their company. There are two exit paths (liquidating or selling), which can take various forms: selling off…

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Case Studies

Software Distribution
Our client, a software distributor, was suspicious that it ‘left money on the table’ because of sub-optimal pricing and the latitude given to sales people. The task was daunting as hundreds of thousands of transactions, across thousands of SKUs, are processed every year.  The VMX team tested various segmentations within the transactions database, the CRM, and the company’s financial systems, driving new perspectives and insights, then made key recommendations which were implemented. Within the 3-month duration of the exercise, EBITDA run-rate increased by 15%, with visibility into more increases down the road.

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Versature
Versature is a rapidly growing Canadian VoIP service provider that had been through an unsuccessful sale process with another investment bank. FirePower’s Investment Banking team crafted a story highlighting Versature’s strong growth, brand, people and processes. The most compelling offer came from net2phone, a subsidiary of US public company, Under this new ownership,, Versature is well-positioned to accelerate its growth trajectory.

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CSR Cosmetic Solutions
The owner of CSR had taken over the business out of bankruptcy. After successfully building it into one of the largest cosmetic contract manufacturers in North America, he was ready for a well-deserved retirement. A previous sale attempt (by a top-tier accounting firm) was unsuccessful in 2015.

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The Firepower Team was a pleasure to work with. They made sure we had a thorough understanding of the sale process right from the start. The team compiled an extensive worldwide list of prospective acquirers, and after considerable work, found us a strategic buyer that fit with our objectives.  This was no easy feat, given the firm parameters we'd set out defining the right buyer: one who would embrace the culture of our company, be aligned with our existing values, support our current management team, leverage our relationships with our vendor partners, and allow us to retire.
At all times, we were well supported by Alan and his team, which made the process much easier than anticipated. I am happy to recommend Firepower to anyone who is looking to sell their business.
Shelley Wishart, Co-Founder and CEO, Orchard International