Buying or Selling a Small Business? What You Need to Know

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Buying or Selling a Small Business?What You Need to Know

Buying or Selling a Small Business?What You Need to KnowNovember 2, 2016

Todays PanelistsHOST: Shelley Ng, Ceridian Vice President of Product Management for small and midsize businessesUses customer feedback to develop and implement new business linesTracks industry trends and helps customers capitalize on new developments

MODERATOR: Stuart Ducoffe (LLB, CHRP) e2r Founder of e2r Solutions and partner and co-founder of Woolgar VanWiechen Ketcheson Ducoffe LLPPractices employment and labour law exclusivelyCertified by HRPA as a Certified Human Resources Professional (CHRP)Worked with one of Canadas largest and most prestigious Canadian law firms

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Todays Panelists Sean Foran, CIBC Managing Director of Business Transition PlanningProvides advice on market values for private companies, as well as the optimal tax and legal structure for businesses in transition Co-author of Succession Stories from the Front LineEstate and Trust lawyer with 20+ years working with business owners Director & Practice Leader, Business Transition ServicesFourth generation to work in familys firmExpertise in business strategy, value enhancement, succession development 20+ years experience helping business families, private companies and not-for-profits deal with transitionJeff Noble, BDO Canada LLP

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Todays PanelistsCharlotte Burke, Microsoft Vice President for small to medium businesses 25+ years experience leading high growth private and public technology companiesFormer executive in residence with the BDC Advantage and Venture Capital GroupsOver 15 years serving as corporate director on public and private boardsMentor at MaRS and the Next 36 helping early stage companies commercialize their businesses

Nunzio Presta, BizONCEO of BizON, an online marketplace where people can buy, sell and grow businesses or franchises Thought leader on digital marketing and entrepreneurship through acquisitionMentor to many entrepreneurs

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Agenda

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Many Business Owners Fail to Plan Ahead

25%Currently have a succession plan to address the day when they are no longer able/willing to run the operation*

What is more long-term than the transition of the business?* BDO survey

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Three Circle Model Family well-beingA cohesive ownership group with a common visionA profitable and successful businessInsight from Sean Foran, CIBC

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8Lets broaden our perspectiveFAMILYHow do you define familywhat is important to your familyDo all family members understand their unique contributions to the family system?BUSINESSHas your family discussed requirements to work in the family business?Does your family understand the difference between working in the business (salary) and being an owner (dividends / growth?)OWNERSDoes everyone understand who the owners are now / will be in the futureDo the owners have a cohesive vision of values for the business / expectations for ROIHow do they own (directly / trust)What kind of shares do they own? Common / preferred / voting /non voting / dividend entitlementsHow can owners exit / sell their shares?

WHEN WE LOOK AT ANY CIRCLE IN ISOLATION WE do a disserviceThese individual systems all overlap Perspectives differ dramatically depending on which circle or overlapping intersection family members and key employees are in

Every Business WILL Transition Plan for a voluntary transition

Inside the family / business

VOLUNTARY Lifestyle changesRetirementINVOLUNTARY Death / DisabilityDisagreement / DivorceDecline in profitabilityProtect against an involuntary transitionOutside the family / business Insight from Jeff Noble, BDO

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9The reality is that EVERY business WILL transition

The question is whether the transition will be involuntary or voluntary

What do I mean by an involuntary or voluntary transition

Storm clouds, failures

Good times, good returns

Slow death, memoriesTimeBusiness ValueAll Businesses Go Through This Cycle Over TimeInsight from Jeff Noble, BDO

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Rejuvenation; new blood, new ideas, different thinking; M&ATimeBusiness ValueA New Cycle Can Begin Timing is CriticalStorm clouds, failuresGood times, good returnsSlow death, memoriesInsight from Jeff Noble, BDO

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TimeBusiness ValueA Revitalized, Larger, Growing Business Can EmergeGood times, good returnsStorm clouds, failuresRejuvenation; new blood, new ideas, different thinking; M&AInsight from Jeff Noble, BDO

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The Trajectory

LiquidityRelinquish Control

Management buyoutStrategic salePrivate equity (control)

Recapitalization (minority)Debt recapitalization

Data Insight from BizON Incorporated - mybizon.com

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3 Pillars to Creating a Valuable Business for SaleTIMINGRECURRINGSELF-SUFFICIENTGrowthSeamlessSustainable

Financial RewardData Insight from BizON Incorporated - mybizon.com

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Critical Success Factors

Build All 3 Types Of CapitalSOCIAL Maintain the culture and enhance the legacy via a strong connection with employees, customers, family and community Mission, Vision, ValuesCulture of EngagementIndividual/Family ReputationCommunity, Philanthropy, Environment, etc.

INTELLECTUAL Identify and mentor successors (internal & external) Skills/CompetenciesExperience/WisdomProduct KnowledgeRelationships/ReputationFINANCIAL Provide for the financial independence and lifestyle of retiring and future owners

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Q & A

Ceridian HCM, Inc. All Rights Reserved.