An interactive half-day workshop designed specifically for business owners, their business partners, and their close advisors. This workshop focuses on the challenges and solutions faced during the business transition; whether you are preparing to sell your company or pass it to the next generation. Featuring a panel of seasoned experts, we review a real-world business transition scenario, providing valuable discussion and insight around the complexities of transitions.

1. The Business Owner’s
Path to Transition

2. Vanessa Flockton
Financial Advisor
Nicola Wealth

3.  Private counsel wealth manager and financial advisory firms
 Manage $6.7-Billion (2400 families)
 Focus – Private wealth management for families, foundations, and trusts
 Integrated financial advice for professionals, executives, and business owners
 18 professional asset managers
 40 advisors
 200 total staff
 Private counsel wealth manager and financial advisory firms
 Manage $6.7-Billion (2400 families)
 Focus – Private wealth management for families, foundations, and trusts
 Integrated financial advice for professionals, executives, and business owners
 18 professional asset managers
 40 advisors
 200 total staff

4. John Nicola
Chairman & CEO
Nicola Wealth

5. Our Experts
Peter Mogan
Managing Partner
Mogan Daniels Slager Law
David Lam
National Corporate
Finance Leader
Deloitte
Dave Christian
Senior Partner
Thorsteinssons

6. Who Are We?
1.2 million SMEs in Canada
89% of the private work force = 10.7 million employees
41% of all exports
51% of GDP

7. Why Plan?

8. Too many
problems to
overcome

9. Acquisition
Sell in the
Open Market
Sell to Your
Employees
Friendly
Buyout
Ways to
Sell Your
Business

10. Meyer Western Transport
Operates in
BC, AB
WA & OR
Fleet size 125
Lumber Industry
Transportation
& Transloading
Other Facts
• 30 years old
• 280 employees
• 3 principal shareholders
• Last 5 years growth = 10%/yr
• $6 million of EBITDA
• Valuation = $30-$40M

11. Meyer Western Transport
Janet Meyer
• Co-founded company with late husband
• Age 62, four children
• Two work in the company
• Owns 60% of the shares through a
holding company
• Holdco owns real estate leased to MWT;
Value $15M, Income $500,000/year
• MWT shares = 50% of her net worth
Frank Donnelly
• Operations manager
• Bought 20% shares for
$200,000 28 years ago
• Mid 60’s – retire in 3 years
• Married – wants to travel more
• Shares = 75% of his net worth
Olivier Deserres
• Age 47 CEO
• Married three children at home
• Shares bought $1.5M in 2011
• $300,000 still owing
• Looking for growth
• Family needs for education and
recreational property

12. SWOT Analysis
Helpful Harmful
InternalExternal
Strengths
• Reputation
• Modern fleet
• Prop. technology
• Leadership
• Solid growth
• High barriers to entry
Opportunities
• 70% customers in Canada
• US growth
• Sell prop. loading system
• Better productivity
• Expand: Sask, Man, Cal
Weaknesses
• Competitive industry
• Cyclical industry
• Lack of ERP
• Safety record issues
• Lack of long-term contracts
• Customer concentration
Threats
• New transport systems
• Softwood lumber
• Political and environmental
• Attracting millennial workers

13. David Lam
National Corporate Finance Leader
Deloitte

14. Fall 2019
Confidential
Case Study – Meyer Western Transport
M&A Advisor’s Perspective

15. Enterprise Value Range ($ in millions)
Public Company Comparables 6.0x to 10.0x
Methodology EV/EBITDA Valuation Range
Deloitte CF Range 5.0x to 7.0x
Precedent Transactions 5.5x to 9.0x
Discounted Cash Flow 4.0x to 6.0x
Leveraged Buyout (LBO) 5.0x to 6.0x
Valuation of Meyer Western Transport
Summary of Valuation Analysis
Assuming a TTM EBITDA of $5.0M:
5.0x – 7.0x EV/EBITDA
$25.0M – $35.0M EV
Summary of Valuation
5.0x – 7.0x Potential for a
competitive spike bid.
5.0x 6.0x 7.0x 8.0x 9.0x4.0x3.0x
EBITDA Multiple
Note: Excludes proprietary loading technology / system
5.0x 7.0x 9.0x 11.0x3.0x1.0x

16. Assessing Growth Opportunities
Acquire Property in PGTuck-in Acquisition in Alberta
 $7M implies paying 2.8x…trading at 6x….the deal is
accretive financially
 Approx. $5m to $10m increase to shareholder value
in the short term
 Qualitative considerations include:
o Timing of cost synergies?
o Execution risk of the deal? Never done a
deal before?
o Potential integration issues and difficulties
to achieve desired synergies… (Alberta
economy)
o Limitation of financial capacity may
necessitate introduction of capital from
external sources…though most of the value
is tangible assets
o Immediate benefits may be realized via
increased scale
o Immediate time to market
 No projections / forecasts…6 year payback…less than
3
 Safer underlying asset than rolling stock but what’s
the investment needed to build up the PG business?
 Qualitative considerations include:
o Longer time to make fully operational
o Inherent risk of greenfield operations
o Typically accretive in the mid to long term
o Does this timeline line up with the
shareholders’ objectives?
Acquisitions need to fill the gap analysis in the overall Corporate Strategy. Would either of these opportunities enhance
MWT’s strategic positioning? And will it align with Shareholder timelines?

17. Value Drivers and Value Creation
Key:
External Factors Internal
Factors

18. Peter Mogan
Partner, M&A | Business Law
Mogan Daniels Slager

19. CASE STUDY – MEYER
WESTERN TRANSPORT
A LAWYER’S PERSPECTIVE

20. Differing Objectives
• Deal with the conflicts
• Clarify interests (needs, wants, fears)
• Clarify context (controlling shareholder,
shareholders agreement, existing contractual
commitments)
• Generate options
• Develop a process for finding a way forward

21. Frank – The Exiting Owner
• Needs:
• A way out over the next 2-3 years
• Money to fund retirement
• Wants:
• Maximize value
• Tax efficiency
• Reduce risk
• Fears
• Being stuck longer than he wants to be employed
• Trapped investment in the company

22. Olivier – Grow the Business
• Needs:
• His job
• Money to grow the company
• Wants:
• Some cash off the table
• Maximize opportunities
• Increase his ownership
• Fears
• Being forced out by a sale
• Losing key business opportunities

23. Janet – On the Fence
• Needs:
• Ongoing cash flow
• In the long run, an exit
• Wants:
• De-risk through diversification
• Family involvement in the business
• Meaningful personal role
• Partner harmony
• Maximizing exit value
• Fears
• ???

24. Pre-sale Agreement
• Financial and legal advisors
• Good faith and cooperation
• Minimum acceptable offer – price and other terms
• Internal bids
• Tax planning
• Personal services
• Costs
• Interim arrangements
• Dispute resolution

25. Family Business Considerations
• How to maintain a meritocracy
• Finding a balance with non-involved children
• Broadening ownership beyond the family
• Timing of ownership transition
• Funding exits to family members

26. OPTIONS

27. Status Quo

28. Pursue Growth Opportunities Only

29. Debt Financing

30. Minority Equity

31. Private Equity – Majority

32. Alternative Financing

33. Sale of Business

34. Sale of Real Estate Only

35. Employee Ownership

36. David Christian
Partner
Thorsteinssons Tax Lawyers

37. Tax Planning as Part of Succession
Planning
David Christian

38. Tax Planning as Part of Succession Planning
 What is the role of Tax Planning?
 Asset Sale versus Share Sale
 The Capital Gains Exemption
 Post-sale Planning

39. John Nicola
Chairman & CEO
Nicola Wealth

40. Planning for Janet
$200K
Personal assets including
home, rec property, and
RRSPs = $4M
• Large extended family
• 2 children work at MWT but have no equity
• 6 Grandchildren under 20
• Philanthropic
• More than 80% of net worth tied to company
• Tax liability of $10M in her estate and growing
60%
Meyer Holdings Assets
Real estate = $15M
MWT shares = $20M
Passive investments = $2M

41. Janet’s Planning Options: External Sale
1. Create IPP for $1M+
2. Consider sale of building or some shares in MWT to
diversify
3. Use DAF or Foundation to minimize tax and endow
philanthropy
4. Freeze shares in Holdco, update will and arrange
insurance to reduce tax in estate from $10M to $6M
5. Consider reorganization of Holdco shares in MWT to
allow active children to be shareholders
6. Lend funds to a trust to effectively income split with
her children and grandchildren

42. Meyer Western Transport
Frank Donnelly
• Operations manager
• Bought 20% shares for $200,000 28
years ago
• Mid 60’s – retire in 3 years
• Married – wants to travel more
• Shares = 75% of his net worth
Action Steps
• Fund IPP for $1M funded over three
years; income split with spouse on
retirement
• Sell shares for $5M and take VTB for
three years
• Claim SBGE (might need sidecar)
• Tax = $1M
• Use loan to split income on assets with
spouse
• Tax = 17% of $6M received

43. Meyer Western Transport
Olivier Deserres
• Age 47 CEO
• Married, three children at home
• Shares bought $1.5M in 2011
• $300,000 still owing
• Looking for growth
• Family needs for education and
recreational property
Action Steps
• Reduce his position by 5% in MWT for
$1.5M
• After SBGE net proceeds are $1.3M
• Pay off mortgage and payments of
$20,000/yr
• $1M left for recreational property
• Negotiate options with new buyer tied
to growth in the company

44. Meyer Western Transport (Internal Solution)
Janet Meyer
• Freezes Holdcos interest in MWT;
new shares issued to two children in
the business
• Sells building and uses IPP and DAF
or Foundation to minimize tax
• Invests the rest in a balanced real
estate portfolio; income same as
before (less risk more liquidity)
• Preferred shares in MWT redeemed
over 10 years
Frank Donnelly
• Sells shares starting now over three
years with a VTB for $5M
• Company funds $1M IPP over three
years
• Consider use of sidecar for SBGE
• Funding internally means no
dividends for many years
Olivier Deserres
• Now at 25% ownership
• Gets options to increase to 33%
over five years
• Long-term objective to have equal
common share ownership after
five years

45. Why Plan?
 Less stress
 Less tax
 More security
 Better results

46. Leg Stretch &
Coffee Break

47. Facilitated Discussion

48. Question
& Answer

49. THANK YOU