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.
Jacoline Loewen
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.
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.
