Thinking about buying or selling a business

At Raintree, we pride ourselves on offering clients a full suite of complementary products and services to help achieve their wealth management goals. Our Core + ExploreTM model is built around diversification, by including alternative investment strategies to augment a client’s traditional public investments portfolio. Raintree Wealth Management provides discretionary investment management and makes referrals to third-party portfolio managers while Raintree Insurance Services provides clients with the most effective insurance solutions which may incorporate unique investment and tax strategies.
However, an oft-neglected part of a business owner’s wealth management or succession plan is the purchase or a sale of a business. In fact, it can be argued that it serves as the main catalyst for building a proper wealth management plan.
Raintree Corporate Finance is the investment banking arm of Raintree. We structure and underwrite new investment opportunities that align with our Core + ExploreTM model and we also provide advisory services to companies seeking capital or a mergers & acquisition (M&A) transaction.
Whether a client is looking to expand its business through an acquisition or looking to sell a business for an exit or for succession planning, our experienced and dedicated team of professionals are here to help. Even business owners contemplating a transaction with the next generation of managers may require advice on how to structure the deal and assist the next team in raising capital to complete the transaction. 
Despite being likely the most complicated transaction in a company’s history, an acquisition or sale of a business is often viewed as a one-time event, because we only see or hear about the end result (i.e. “Company A bought Company B” or “Company X sold to Company Y”).  However, behind the scenes, it took months of strategic planning and proper execution to ensure a successful outcome.  Based on our experience, below are key success factors that must be considered:
Preparation:  Thoroughly preparing for an M&A transaction requires proper planning and preparation.  From preparing the actual business (organizational, financial and structural) to understanding the goals and objectives of all stakeholders involved.
Determining a Right Time:  Are market conditions conducive for a transaction?  Is the Seller personally ready to sell and/or is the Business itself ready to be sold?  Is this the right time to acquire a company and does it align with the Company’s long-term objectives?
Finding the Right Buyers or Targets:  In a sale process, creating competitive tension amongst potential purchasers maximizes value.  In an acquisition, unearthing potential targets beyond the most obvious choices provides leverage during the negotiation stage.   
Structuring:  An M&A transaction is full of complexities in order to meet the objectives of both the seller and the buyer.  Oftentimes, creative “out-of-the-box” structuring can bridge the valuation gaps required to close a transaction.
Negotiation:  Having an independent financial advisor removes the emotions out of the negotiation process, which can often be a stumbling block.    
Managing the Process:  An M&A transaction can oftentimes feel and look like a winding road with multiple forks and speed bumps.  We provide the transaction roadmap to help guide you through the process.
Confidentiality:  All M&A transactions require sharing of confidential information – we utilize a proven process that ensures that business owners keep their information confidential throughout the process. This can be critical when dealing with customers, employees and competitors.
The above summary outlines some of the important factors to consider, but experience is essential to maximizing the result of a M&A process.
First and foremost, globally and particularly in North America, there is a lot of capital available to be deployed. In our industry, this is commonly referred to as “dry powder.”  Financial buyers such as private equity firms and pension funds have tremendous amounts of dry powder from fundraising efforts prior to the pandemic and now need to generate returns on that capital to their shareholders.
In terms of market activity, without a doubt, the pandemic put a temporary pause on M&A transactions as stakeholder groups endorsed a “wait-and-see” approach.  However, our team has recently seen activity return to the markets as these groups reassess previously halted transactions while exploring new opportunities.
The pandemic has broadened the type of M&A transactions beyond the traditional “acquire to grow” model.  Companies who struggled during the pandemic are seeking mergers in order to survive or are looking to an outright (distressed) sale. On the flip side, acquirors with access to capital have ample opportunities to grow their current businesses or expand into new geographies and segments at attractive valuations.
Raintree’s Corporate Finance team is available to assist entrepreneurs with a sale or acquisition of a business.  Working together with our Private Wealth Advisors, we can offer clients a comprehensive and complementary wealth management solution from beginning to end.  If you are contemplating a transaction and are looking for advice, please do not hesitate to speak with your Private Wealth Advisor or CONTACT US.  It’s never too early to start planning and preparing!
By Rocky Chan, Managing Director – Raintree Corporate Finance