Views From the Market Stikeman Elliott

In this edition of the podcast, Mario Nigro interviews Richter LLP’s Michael Black and Brett Miller about value creation services that can help midmarket businesses achieve their growth and transaction objectives. As Brett and Michael discuss, value creation can involve enhancing board design, optimizing processes, systems and technology and focusing the customer and product mix. Whether implemented internally or through an advisory firm like Richter, a value creation process involves long-term planning that prepares the business for expansion or sale, creating the information base to support target identification, due diligence, transaction execution, post-sale integration and succession planning.

Our guest on this podcast episode is Paul Langley of Capital West Partners, a Vancouver-based midmarket M&A advisory firm. As Paul relates, British Columbia’s diverse economy is dominated by midmarket businesses, accounting for 25% of all midmarket transactions in Canada. While it was somewhat isolated in the past, B.C. is now squarely on the radar of U.S. and eastern Canadian buyers – one reason Paul considers the outlook for 2024 and beyond to be very positive.

Mario’s guest for this podcast is Jill Chua, Managing Director at Raymond James Canada. Jill and Mario discuss midmarket M&A, with a focus on growth equity, one of Jill’s specialties. Growth equity is a niche area of investment that targets companies that have outgrown the venture capital stage but are not ready for traditional private equity. Growth equity firms provide capital and partnership to help these companies scale faster and achieve higher valuations. One key benefit for the founders is that they can often take some secondary proceeds from the cash infusion, while also retaining some ownership, freeing them to be less risk-averse than when a larger proportion of their wealth was tied up in the business.

Mario is joined by Brent Timmerman and Jody Law, Co-CEOs of Pacific West Mechanical Limited, and Mike McIsaac, CEO and Managing Director at Baker Tilly Corporate Finance in Vancouver. They discuss how Brent and Jody, as search fund operators, found and acquired Pacific West, a plumbing and HVAC service and maintenance company in Vancouver, with the help of Mike and his team, who acted as the sell-side advisors for the previous owners. The guests share their insights and experiences on various aspects of the deal, particularly on the process by which each side determined that this transaction was the right fit for them. Both sides agree that relationship building, based on candid discussions of issues and concerns, is one of the keys to closing a deal.

Our guest on this episode is Robert Bezede of Norton McMullen Corporate Finance, specialists in selling Ontario-based private businesses. Robert notes that activity in the lower midmarket is insulated from the current market headwinds because aging owners are highly motivated to sell. In addition, the pool of prospective buyers has grown, with more financial groups, high net worth individuals, search funders, and family businesses involved than previously, along with increasing involvement from the major banks. Robert also discusses his very successful YouTube channel, “FinanceKid”, which has over 30,000 subscribers.

Mike Karran of the Mintz Group speaks with Mario Nigro about Mintz’ global due diligence and investigations practice, particularly as it relates to vetting investment targets and their executives. Mike describes what Mintz’ investigations look for and gives examples of how the results can change the risk dynamics of a proposed transaction. As investors become more discerning and data-driven, investigative due diligence is increasingly seen as a standard practice in midmarket deals.