Keys to Succession: Understanding the Buyer's Journey
With more than half of Canadian companies expected to change hands in the next decade, succession preparation is an important topic for business owners. But it’s something most don’t even consider until they’re in the throes of handing over the reins.
The Business Transitions Forum (BTF), a unique conference that addresses business succession in Canada, is working to make selling a business easier. “BTF is designed for entrepreneurs and business owners who are thinking about transitioning their business,” says Dave Tyldesley, co-founder of Cube Business Media, which has been producing BTF since 2015. “It covers strategies related to building value in a business, whether you’re planning to keep it in the family or sell to external buyers. It’s a one-stop shop on how to demystify the process of exiting a business and handing over the reins.”
Different types of buyers
One session in particular, entitled The Buying Journey: A Purchaser’s Perspective, helps sellers to get a better sense of what kind of buyers they might be dealing with, and what those buyers are looking for. “There are many different types of buyers,” says Kristi Miller, partner at First West Capital, and a presenter in The Buying Journey session. “Strategic buyers are buying to get more out of the business, and one of the most typical synergies is talent, especially in this tight labour market. Financial buyers are buying to make a return on their money. The transaction is purely financial, so they’re typically not willing to pay as much. They don’t see the same upside in synergies.
“Some buyers are simply buying themselves a job,” she continues. “They’re not looking for a big scalable play, but want to control their own destiny. Legacy buyers want to preserve some kind of legacy, such as employment in a local community, commitment to environmental stewardship or some other purpose.”
While understanding a buyer’s motivation is important, another hot topic for potential sellers is valuation. “‘What’s my business worth’ is the No. 1 question people ask,” Tyldesley says. “And yet there’s no one rule about how a business is valued. Here they’ll learn how to get the answers they need knowing there are lots of different factors involved in valuation.”
Entrepreneurs who are their business
One of the issues many entrepreneurs encounter when they try to sell their business is that they are their business, says Brent Twist, CEO of Encore Business Solutions, which has worked with First West to undertake eight acquisitions in the last several years. Twist is also a presenter in the Buying Journey workshop and offers a wealth of first-hand experience. “We help people to organize their business so they aren’t as key, so the business can still operate without them.”
Networking with advisors & entrepreneurs
While about half of the conference’s attendees are entrepreneurs, the other half consists of senior level executives, the advisory community (including people like Miller and Twist) and others who specialize in mergers and acquisitions such as lawyers and accountants. “You can Google exiting a business, but you’re not going to find the people that make these deals happen,” Tyldesley says. “Meeting practitioners in the industry and getting a 360-degree view of all of the different moving parts in an exit is crucial. There’s nowhere else you can get that from reputable sources. We will accelerate your learning.”
The Business Transitions Forum takes place in Vancouver Nov. 7 and 8 at the Westin Bayshore Hotel. Info and registration at businesstransitionsforum.com/vancouver and early-bird tickets available until Oct. 19.