In Episode 3 of The Selling Successfully Podcast, Portage Founder and Partner Jim Friesen chatted with longtime friend of the firm and former Portage client, Len Hume. Len joined Jim to talk about his experience as a seller interested in finding a buyer who would carry on the legacy he and his wife Annette had built over two decades with their business, Professional Cleaning Specialists (PCS) of Niagara.

Here are 5 key takeaways for business owners thinking about or ready to sell.

1. You don’t know what you don’t know.

If this is something you can embrace, you will be well ahead of the game. Understanding that we don’t know everything encourages us to seek out expertise and advice from others. Engaging with mentors, consultants, and subject matter experts allows us to tap into their knowledge and experience, gaining valuable insights and guidance. Collaborating with those who possess specialized knowledge can help fill the gaps in our own understanding and improve decision-making.

Ignorance of potential risks can lead to poor decision-making and negative consequences for a seller. Recognizing that we don’t know everything helps us prioritize risk management and seek expert advice when needed. It encourages a more thorough analysis of potential risks and the implementation of proactive strategies to mitigate them effectively.

Len took this to heart and was quick to recognize the gaps in his knowledge, particularly in the complex realm of selling his business. This allowed him to address his blind spots head on with a humble and open approach to new information, perspectives and learning opportunities. 

Len and Annette drew on the expertise of many professionals to ensure their business ran well, was profitable and would eventually be ready for a successful sale. They sought advice and strategic guidance from financial consultants, tax and legal experts and last but definitely not least, their M&A advisor. By assembling a strong deal team with a wide range of expertise, they collectively filled gaps and tackled complex challenges more effectively. 

2. You’re getting out one way or another.

Running a business is all-encompassing. It’s your passion, your pride and your meal ticket. It’s not surprising then that the first thing on a business owner’s mind when they first begin isn’t how they’re going to get out but how they’re going to move up. Len cautions it’s easy to get wrapped up being busy in the business and neglect an exit plan. On the advice of Len’s professional network, he started planning early on to ensure nothing fell through the cracks. This got his finances in order and provided a seamless handoff but also made him an ideal candidate to work with from an M&A perspective.  

Early planning is of paramount importance from a mergers and acquisitions (M&A) point of view. In the complex and dynamic world of M&A transactions, careful and strategic planning sets the stage for success. By initiating the planning process early on, organizations gain valuable time to thoroughly evaluate the strategic objectives, financial implications, and potential risks associated with the transaction. Early planning allows for comprehensive due diligence, including thorough analysis of financials, operations, market position, and legal obligations. It also facilitates the identification and resolution of potential challenges, such as regulatory hurdles and cultural integration issues. By starting the planning process early, M&A stakeholders can proactively address these complexities, make informed decisions, and develop a well-structured integration plan that maximizes synergies and minimizes disruptions. 

3. Turn roadblocks into detours.

A calm and confident expert is prepared for challenges you may not be. 

Selling a business involves multiple parties, including legal advisors, accountants, financial planners and tax specialists. Typically, M&A advisors take on the responsibility of coordinating and managing these parties, ensuring a smooth and efficient transaction process. They handle the paperwork, facilitate due diligence, and oversee the transaction timeline, allowing you to focus on running your business and remain stress-free (for the most part!).

Your M&A advisor also provides comprehensive support throughout the transaction, from initial planning to post-closing activities. They help prepare necessary documentation, manage regulatory compliance, and facilitate a seamless transition of ownership. Their guidance ensures that all legal and regulatory requirements are met, reducing the risk of post-transaction complications.

Len’s deal structure was unique and required collaborative investigation across the team in order to attain significant tax savings. Generally, it is advised to sell shares versus assets to take advantage of the lifetime capital gains exemption. Further, in Len and Annette’s unique case, they also owned the land and the building. If they were to retain these, as was originally hoped, they would not be eligible for additional tax savings. It became a necessity to sell both the business and the corporation that owned the land and building at the same time. Portage worked closely and creatively with Len’s advisors to successfully navigate selling shares of the Holdco to get the lifetime capital gains exemption on the land and building which is rare but achievable with the right hands on deck. 

4. Make friends with your advisor. 

The path to sale is a personal one. Len recommends finding an advisor who makes you feel comfortable and supported. His long-standing relationship and annual golf game with Jim is evidence of the kind of friendship that can be built. Working with someone you like can make the overall experience more enjoyable. You can share lighter moments, celebrate milestones, and appreciate each other’s company. 

By developing a friendship with your M&A advisor, you create an environment of trust, mutual understanding and camaraderie. This foundation allows for open and honest conversations, making it easier to discuss sensitive topics, share concerns, and collaborate effectively. It can also lead to more creative and effective strategies throughout the M&A process.

Keep in mind, M&A transactions can be complex and lengthy processes. By forming a bond with your M&A advisor, you create the opportunity for a long-term relationship beyond the immediate transaction. This forward-thinking perspective can be valuable for future business endeavors or potential repeat transactions, as you already have a trusted and established relationship.

5. Have the life you always wanted.

With the right people in your corner, you can realize your dreams…and then some. 

Len and Annette had a checklist of things that had to happen in order for them to deem the sale of their business a success. There was a magic number that would enable the kind of retirement they had always envisioned and they wanted the business to go to someone who would carry on their legacy and continue to foster the client relationships they had built over twenty-six years in the industry. 

Len and Annette achieved their goals by sticking to their tried and true philosophy, “If you want to be successful, you have to do things the right way and surround yourself with people who are smarter than you.” Not only did they find a perfect match in their buyer with the help of their diverse deal team, but they also created a working relationship with the new owner that allows them to consult on the business and continue to lead a purpose-driven life.

Conclusion

For most, selling a business is uncharted territory. The thought of retirement or that next phase gets lost in the busyness of doing business. Owners don’t know where to begin or what to expect and some are not even aware that services like Portage M&A Advisory exist. 

There are a lot of moving parts and the whole undertaking can be overwhelming, especially without proper support. From our perspective (and Len’s!), the path to a successful and fulfilling sale is clear — everything starts with the right advisor.

To learn more about Len and Annette’s motivational journey listen to the full podcast, A Seller’s Experience: The Right M&A Advisor Makes All the Difference, here Portage – Podcast – M&A Advisory (portagemaadvisory.com).