We’re a specialized team of experienced M&A professionals built for one specific purpose — to sell great companies for great people.
Since inception, Sequoia has achieved an unwavering degree of success for our clients, resulting in an abundance of choice in who to sell to, higher than expected valuations, and better deal terms.
0
Number of Successful Transactions
0
Average Transaction Value (in millions)
0
Years in Business
0
Private Equity Relationships
We only do one thing and do it well — the sale of privately-held companies for business owners.
We have sold our client’s companies for significantly higher than their expected values — we are happy to provide client references to substantiate this statement.
Since our inception in 2007, we have achieved an unwavering degree of success for our clients. We have repeatedly proven that the consistent rigour of our process leads to successful transaction outcomes for our clients and their companies.
Our proprietary sales process creates a bespoke market, typically resulting in 3 to 8 bona fide letters of intent to purchase our client’s companies. That not only increases valuation, but affords choice of who our client sell to and the terms upon which they want to sell.
Since the vast majority of our fee structure is contingent upon the sale of the company, our client’s fee risk is minimized until the sale completes — that aligns our objectives with our client’s.
A family-owned company that directed the site management and construction for some of the largest industrial plants built in the history of Canada.
Success Story Browse All Stories
To capitalize on the once-in-a-lifetime opportunity to significantly increase the return for your life’s work, we employ a sales driven approach that is tailored to your company.
You are our employer, so its best we get to know one another to ensure the chemistry is right.
We create a custom tailored marketing campaign including marketing documents, a strategic purchaser list, and a preliminary data room.
Through a process of meetings, facility tours, and Q&A, we narrow the list of qualified potential buyers to those with the best cultural fit.
We work with purchasers through the due diligence process, ensuring they have everything they need in order to successfully close a transaction. We keep everyone’s focus on the finish line.
You only sell your company once and it has the potential to greatly improve your life. To ensure you know what you’re getting into, we’ve addressed some of the most frequently asked questions here.
The following steps remain to close the transaction, a process that takes typically two to three months to conclude.
Due Diligence
When writing a letter of intent, the buyer’s commitments come with caveats that the closing of the pending transaction is subject to buyer verification. The time has come for the buyer to validate that what has been represented is substantially what is being bought. To facilitate, Sequoia will provide access to the electronic data room to enable select, time-limited access to the buyer and the buyer’s advisors engaged in due diligence.
Sequoia plays a critical role in managing the effects of change in the mindset of the parties during this phase. Although buying and selling a company is a business matter, it is one conducted by people. When a letter of intent is accepted, there is a distinct change in buyer behaviour — glasses once half full become half empty. The increased presence of advisors (accountants, bankers, and lawyers) can produce conflicting information and negative viewpoints. Maintaining momentum is crucial. Sequoia’s role now focuses on defending value, maintaining clear and direct communication flow between all parties, anticipating roadblocks and solutions thereto, and eliminating friction and mitigating emotions between parties adopting an adversarial stance. We’ve efficiently and successfully managed transactions with buyer deal teams of more than 35 professionals, including subgroups from strategy, finance, operations, real estate, environmental, insurance, HR, and legal. Until the transaction is done, the process remains a sales function and closing becomes the number one most important sales skill.
Momentum Management
Managing the flow of information is a full time job once there is an executed letter of intent and due diligence is underway. It is critical to have all information requested by the buyer catalogued and accounted for to facilitate a smooth and expeditious due diligence process. Sequoia’s electronic data room technology ensures that all documents and data that are accessible by the buyer are tracked from source of request through posting to the electronic data room to satisfy each due diligence item without redundancies that can cause significant delay, and in some cases, can derail the transaction. Our electronic data room technology enables real-time viewing of who on the buyer’s deal team is accessing what information and when. On a typical transaction managed by Sequoia, the information flow through our electronic data room amounts to gigabytes of data, not to mention thousands of emails, and countless phone calls, teleconferences, and meetings to coordinate the due diligence process — diligence indeed.
Assign Material Contracts
Most companies have valuable contracts with key suppliers, distribution channels, landlords, or customers that contain change of ownership clauses that require consent, explicitly or otherwise, to assign or transfer the contract to a third party (i.e. the new owner of your company). The realities of business dictate that the timing of these meetings be well thought out to ensure a successful outcome. Sequoia has considerable experience in the planning of these meetings and generally attends them with you and the buyer of the business.
Purchase and Sale Agreement
This is the final written agreement upon which your company is sold. The buyer’s lawyer initiate the agreement. Both sides need some caution with their lawyers at this stage. First, choosing an experienced lawyer that specializes in mergers and acquisitions is paramount. There are many facets of business law — those lawyers focussed on M&A transactions know the ins, outs, and nuances of business transactions and are a necessity for representing your legal interests in this matter. Besides the lawyer’s specific expertise, a good M&A lawyer will focus on closing the transaction, pragmatically find a way around problems, and think in sound commercial (and not purely legal) terms. Conversely, a poor lawyer inexperienced in mergers and acquisitions will find ways to unpick a good transaction through irrelevant distractions to the point where it becomes at risk of frustration or failure. We must agree with the buyer that both sets of lawyers are to be servants of the transaction and not masters of it.
Comprehensive Email Campaign
Initial contact with prospective buyers starts with a series of comprehensive email campaigns. Sequoia invests continuously in highly customized campaign management technology to initiate, monitor, and control the distribution of the Anonymous Business Profile to the target market. The campaign management technology uses the most up-to-date methods for negotiating corporate firewalls, spam filters, and other email suppression techniques to ensure maximum penetration of the target audience while complying with anti-spam legislation. For each deployment, our campaign management system delivers real time notification of metrics on emails opened, links clicked, emails bounced, blocked, and unsubscribed.
The initial campaign generates a large number of parties that have further interest in the opportunity. After a review of the Anonymous Business Profile, buyers with a bona fide interest sign a nondisclosure agreement (NDA) protecting the confidentiality of all subsequent communications and information transfer. All prospective buyers are qualified to determine their motivation, fit, and expected valuation range to consummate the purchase of your company prior to any detailed information being shared.
Target Market Penetration
We actively monitor the progress of the initial and all subsequent email campaigns. Within the strategic buyer segment, we strive for 100% contact with the CEOs, Corporate Development VPs, and other executives within each strategic buyer company. For each company that did not respond to the initial email campaign, we initiate direct contact by telephone with supplemental email campaigns. Armed with background knowledge about the company and its executives obtained from our market intelligence technology, we determine the buyer’s level of interest to acquire your company and focus on the benefits that could be derived in combination with the target strategic or private equity buyer.
Buyer Engagement and Selection
Subject to your approval, qualified buyers under NDA are provided the Confidential Information Memorandum. Following further discovery and qualification, each buyer is introduced to you in a controlled set of conference calls, meetings, and management site visits. It is during this stage that we assert a compelling commercial thesis to each buyer that emphasizes the added value represented by your company within the framework of their operation or ownership. Likewise, we provide guidance of the range of expected commercial terms for a successful transaction.
Sequoia’s sales process causes an effective auction that has resulted in 3 to 8 bona fide letters of intent to purchase our client’s companies. That not only increases valuation, but affords choice of who our client sell to and the terms upon which they want to sell. That is important because when you sell your company, you have a vested interest in its continued growth and success since you may retain a minority equity interest in the company, hold a vendor note, or perhaps be landlord to the new owner of your former company. Not to mention that you want to sell to the party that is both a growth partner for your company’s management team and is a responsible steward of your company’s culture, its brand, and its legacy.
After you have chosen the preferred buyer, the next step is to negotiate a Letter of Intent (LOI).
Sequoia will conduct guided interviews with you to understand strategies, policies, and procedures of the company, including competition, marketing, sales, distribution, customers, territories, administration, manufacturing, engineering, customer service, human resources, financial matters, information technology and security, process control, intellectual property, and the like. The pool of information gathered enables us to prepare two essential sales documents before taking the company to market — the Anonymous Business Profile and Confidential Information Memorandum.
1. Anonymous Business Profile (ABP)
The ABP or “teaser” is a one-page data sheet used in the early stages of buyer contact. It highlights the fundamentals of your company and sells the benefits of your company’s unique characteristics to buyers without identifying your company name, location, or other company characteristics that you deem confidential.
2. Confidential Information Memorandum (CIM)
The CIM is a comprehensive book that conveys an individual expression of the unique characteristics of your company. It is provided only to parties that have been qualified, signed a nondisclosure agreement (NDA), and have been approved by you prior to being sent. The focus is the benefit of your company to prospective buyers. The goal is to engage the buyer in discussions about your company in the context of combined resources (merged operations, new capital investment, etc.) with the buyer. Whereas it discloses financial information of your company, it is not exhaustive. Details are deferred until due diligence, after a commitment has been made by the buyer to acquire your company. The contents of a typical CIM include:
Company Overview
Financial Analysis
Human Resources Overview
The following is a description of the work we undertake pre-engagement, at our expense, to determine the fit of your company to our proven marketing process. These valuation methods calculate a financial value for your business. Sequoia takes on engagements where we are confident that we can beat the financial value in the market.
Opinion of Value Analysis
Sequoia will conduct a Preliminary Opinion of Value Analysis of your company. The opinion is an estimate of the range of the expected value to a financial buyer (i.e. a rational buyer seeking a return on the expected future cash flow of the company). The opinion provides the seller with a benchmark of the company value in the absence of exposing the company to an open market of strategic and private equity buyers. The opinion is not used as a “price tag” for your company. Instead, when a business is taken to market, its value is based upon what buyers are motivated to pay — creating competition for your company dramatically increases value.
Sequoia has developed its own proprietary financial modelling and forecasting tools that are customized specifically for mid-market companies and uses the following proven methodologies.
1. Iterative Discounted Cash Flow (IDCF) Analysis
IDCF is a rigorous and comprehensive methodology that optimizes the maximum price of the company to the seller subject to achieving the buyer’s financial return objectives. Value to a buyer is quantified by the true cash flow generated over an investment time horizon after satisfying the cash requirements of the five claim holders to the business cash flow: a) the Seller, b) the Buyer, c) the Business, d) the Lenders, and e) the Tax Authority. Determining the buyer’s true cash flow requires knowing the buyer’s post-acquisition capital structure, but the buyer’s post-acquisition capital structure cannot be known until one knows the company value. One does not know the company value until one knows the buyer’s actual cash flow.
This circular problem is solved through an IDCF analysis. An IDCF analysis repeatedly calculates complete pro-forma financials (fully projected income statements, statements of change in cash position, and balance sheets) until a value and a capital structure are found that satisfy the objectives of the seller and buyer.
2. Capitalized Earnings Approach
The Capitalized Earnings Approach seeks to determine the selling price of a company by capitalizing its normalized cash flow as a function of the cost of equity of the company. Such analysis involves determining the adjusted EBITDA of the company over a multiyear period, determining the cost of equity through consideration of industry coefficients for competition, risk, profitability, industry trends, ease of replication, barriers to entry, and the like, and computing the most probable selling price of the target company based on the product of the above.
Target Market Analysis
The success of Sequoia’s process is rooted in the saying that “Whenever you create competition for something you possess, the possession increases in value.” To create competition, we need to create a large enough number of global strategic buyers such that we are able to extract multiple offers from the market to purchase your company. Therefore, before engaging with any client, we conduct preliminary research of allied markets to your company to determine if a full market research would yield the desired size of target market for the marketing of your company.
If the Preliminary Opinion of Value Analysis and your selling price expectations are in sync, the Target Market Analysis is positive, and we are both comfortable working with each other, we will have the basis upon which we can enter into a Business Marketing Services Agreement.