The answer to this question is “maybe.”
The fees charged by intermediaries are significant. However, there are scenarios when qualified intermediaries can add significant value far in excess of their fees.
For example, if your company has performed well for the past two to three years, you want to sell most or all of it, there are a large number of potential buyers and you have no idea who the right buyer will be, a sale process run by an intermediary potentially can generate a much higher value. Another scenario is where the intermediary has particular expertise and experience in your industry, and there is “story” required as part of your sale presentation. If there is significant risk to your business if the word leaks that you are selling, you are likely better off working with a smaller exempt market dealer than a transactional lawyer.
If you want to save on lawyers’ fees, a good exempt market dealer will make sure the bulk of the work is done before calling in expensive lawyers.
There are many scenarios where an intermediary will not add value. For example, if you know the one or two likely best buyers, then you should be able to maximize value with the assistance of an experienced transactional lawyer (which you need regardless).
Private Equity likes to use intermediaries, exempt market dealers, when selling their own portfolio companies.
Often it’s a good idea to seek the advice of your accountant when making this decision. If you decide that you need an intermediary, please do not base your decision on the firm name. Be sure that the individuals that will be representing your company (often not the senior partner that comes in for the dog and pony show) have the talent, experience, time and drive to get your deal done.
Speak to the local ExemptMarket Dealer Association in your geographic area.
is a Director of Loewen & Partners Inc., an Exempt Market Dealer,
specializing in finance for owner operators and family businesses, specifically
acquisitions, restructurings, sales, successions, strategy and private equity financing. Loewen
Jacoline began her career with Granduc Mines, Northern BC, and then Deloitte in their strategy unit. She developed a strategic planning model and published it in a book called "The Power of Strategy”. She also wrote "Business e-Volution" and “Money Magnet: How to Attract Investors to Your Business” (Wiley), which has been used by Ivey as a text book.
She is a Director on the Board of the Exempt Market Dealers Association (EMDA) responsible for brand and communications. She is on the advisory board of DCL International, Bilingo China and Flint Business Acceleration. She has been a Director for other Boards such as the Strategic Leadership Forum.
She is a regular panellist on BNN: The Pitch, a contributor to the Globe & Mail and National Post, serves as a judge for the UBC and the Richard Ivey School of Business’ Business Plan Competitions and is a guest lecturer at Ivey and Rotman Universities. Jacoline holds an arts degree in Industrial Relations from McGill University and a MBA from the University of the Witwatersrand. Her MBA thesis was selected by Cambridge University and published by Cambridge’s Engineering faculty.