Equicapita - Selling your business without a broker


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Equicapita is a Calgary-based nano-gap private equity fund focusing on acquiring Canadian SMEs that can generate strong, sustainable cash flow from their operations in niche markets. Equicapita generally seeks to acquire businesses: at what it believes are reasonable prices; with a demonstrated history of free cash flow greater than $1 million per annum; with a durable competitive advantage; that operate in industries that Equicapita believes have sound long-term macro prospects; with ongoing participation of senior personnel; with the ability to maintain the cash flow without disproportionate amounts of new capital; where Equicapita can partner with management and align their interest with Equicapita through tools such as earn-outs, vendor take backs and management incentive plans; to be held for the long term; where there is some potential to grow sustainable free cash flow, but where that growth is not essential to generate suitable returns.

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Equicapita - Selling your business without a broker

  1. 1. 1Key Steps To Selling Your Business – Without A Business Broker Key Steps To Selling Your Business – Without A Business Broker There are a number of important steps involved in selling any business and it is critical to be mindful of them. The essence of the title of this chapter suggests that you can save money by selling your business without a business broker. However, you should heed the warning that by approaching the sale of your business without at least a roadmap for success, a systematized approach or a mentor with the experience to guide you through the process, you may leave substantial value on the table. Step 1. Prepare your business for sale Step 2. Get a sense for the value of your business, so you can assess whether an offer you receive is a fair one. That can be done through a qualified business valuator or through a mentoring program that provides that service at the outset of the program. Step 3. Prepare a confidential information memorandum that profiles the business. Step 4. Prepare all support documents including: n Confidentiality agreement n Teaser document n Financial summary n Normalization adjustments n Financial forecast n Business overview n Competitive analysis n Industry overview Step 5. Develop a list of qualified purchasers. This will often be obvious to you and it may even be a little scary to put together, because you may be worried about confidentiality issues. However don’t worry about that at this stage, instead compile the list of potential purchasers, which may include: competitors, suppliers, businesses that are in similar industries, private equity firms (financial buyers) that are visible in your industry, your own management team. Step 6. Initiate contact with potential purchaser list on a “no-name” basis. This is usually done direct by telephone and NOT by circulating an email. Step 7. Execute confidentiality agreements (available from your lawyer, advisor or mentoring program). Step 8. Send out the Confidential Information Memorandum to all interested parties that have executed the confidentiality agreement. Step 9. To the extent possible advance all negotiations and discussions with all parties along a similar path so there are more parties “at the dance” that will drive up the price. Step 10. Accept offers and execute a letter of intent (available from your lawyer, advisor or mentoring program). Step 11. Facilitate purchaser due diligence. Step 12. Draft and complete legal agreements Step 13. Close the deal and cash the cheque.
  2. 2. 2Key Steps To Selling Your Business – Without A Business Broker ABOUT EQUICAPITA Equicapita is a private equity fund that acquires established, private, small and medium sized enterprises (“SMEs”) located primarily in Western Canada. Equicapita’s investment drivers are to acquire operating companies at attractive valuations, with a history of generating sustainable cash flow and proven management teams. Equicapita believes that there is: - a generational opportunity to acquire ‘baby boomer’ SMEs; and - a funding gap in the $2 to $20 million enterprise value range. The retirement of baby boomer business owners has been described as triggering one of the biggest transfers of corporate assets on record in Canada. This creates an environment with an abundance of opportunities to acquire SMEs with long-term operating histories, at attractive cash flow multiples. Equicapita provides investors with access to this alternative asset class via an efficient RRSP eligible structure. DISCLAIMER The information, opinions, estimates, projections and other materials contained herein are provided as of the date hereof and are subject to change without notice. Some of the information, opinions, estimates, projections and other materials contained herein have been obtained from numerous sources and Equicapita and its affiliates make every effort to ensure that the contents hereof have been compiled or derived from sources believed to be reliable and to contain information and opinions which are accurate and complete. However, neither Equicapita nor its affiliates have independently verified or make any representation or warranty, express or implied, in respect thereof, take no responsibility for any errors and omissions which maybe contained herein or accept any liability whatsoever for any loss arising from any use of or reliance on the information, opinions, estimates, projections and other materials contained herein whether relied upon by the recipient or user or any other third party (including, without limitation, any customer of the recipient or user). Information may be available to Equicapita and/or its affiliates that is not reflected herein. The information, opinions, estimates, projections and other materials contained herein are not to be construed as an offer to sell, a solicitation for or an offer to buy, any products or services referenced herein (including, without limitation, any commodities, securities or other financial instruments), nor shall such information, opinions, estimates, projections and other materials be considered as investment advice or as a recommendation to enter into any transaction. Additional information is available by contacting Equicapita or its relevant affiliate directly.