The Inside Story

As a multi-generational business, finding the right buyer that could honour the family legacy and be a good steward of the brand was paramount. Sequoia was entrusted to the find the right balance between running an extensive marketing campaign, approaching both strategic and financial buyers, and maintaining confidentiality in a notoriously rumour filled industry.

The right balance was ultimately struck and our client received three bona fide offers for consideration, all while maintaining privacy throughout the process. The buyer chosen had the greatest cultural fit with our client’s company. Furthermore, the deal allowed for key managers at the company to take on a greater leadership role under new ownership.

Both buyer and seller were thrilled with the outcome.







Revenue (CAD):

$27.0 million


$4.1 million

Key Strategic Highlights

Commercial and Institutional Specialists

The company had extensive institutional and commercial experience and was well known in the industry for their specialization.

Technical Proficiency

The company worked well with engineers and had significant experience with design-build projects.

New Customer Acquisitions

The company’s reputation for quality and professionalism was earned over more than seven decades of industry experience.

Related FAQs

What’s Involved In A Typical M&A Process?

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).

How To Value A Private Enterprise?

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.

How Do You Find The Right Buyer For My Company?

Global Target Market

For each client engagement, Sequoia creates a unique global market of buyers specific to the company we are selling. Identifying the maximum number of qualified buyers is key. The most probable buyer does not fall into a single category or profile. Who is most likely to benefit from the characteristics of your company? Is the principal value in your customer base, your people, or your geographical coverage? Mapping these benefits to prospective buyers will result in buyers that are not necessarily competitors. Opportunistic buyers may be better suited than those with an acquisition on their agenda. Lateral thinking at this stage pays great dividends.

Sequoia targets three different buyer categories for each marketing campaign we execute:

1. Strategic Buyers
Strategic buyers are companies that would gain a synergistic benefit from the acquisition of your company. Sequoia undertakes exhaustive market research to identify allied industry sectors whose member companies would benefit from a combination with your company. We mine numerous leading industry databases and internet sources for companies in those sectors. Sequoia’s worldwide reach stems in part from our continual investment in best-in-class market intelligence technology one might find in use at multinational investment banks and corporate finance groups. These industry specific tools enable us to determine the fit of potential strategic buyers as well as identify each strategic buyer’s acquisition history, transaction multiples paid for past acquisitions, and details on the company decision makers. The result of this research is a global market of strategic buyers to which we market your company. Sequoia’s engagements have produced unique target strategic buyer lists ranging from 100 to 500 companies. The list of strategic buyers created for the sale of your company is provided to you for review and approval before we launch our direct marketing campaign to the company CEOs, Corporate Development VPs, and other executives within each strategic buyer company.

2. Private Equity Groups
Private equity firms are professional investors that acquire companies using funds provided by institutions and other pools of money seeking a return from the investment in diverse business interests. Private equity firms broadly classify their investments as either “platforms” (typically companies with more than $5 million in EBITDA) or “add-ons” (typically companies with less than $5 million in EBITDA). Your company may have many attributes that are highly sought after by the private equity sector. Sequoia has direct access to approximately 2,400 private equity firms that are appropriate for mid-market transactions. We have successfully sold companies to private equity in past engagements and will directly target them in our marketing campaign for your company.

3. Sequoia’s Professional Network
Sequoia invests significant time and energy cultivating its network of professionals related to the “liquidity event”. We have connections with approximately 3,000 individuals locally and worldwide that are either mergers and acquisitions professionals in the field of investment banking, business succession, and tax planning, or are part of a community of business advisors adjacent to liquidity events such as corporate accountants, fractional CFOs, transaction lawyers, commercial bankers, and wealth managers. Whereas our Professional Network members are not the buyers per se, marketing to them results in direct connections to qualified buyers for businesses we have successfully sold in past engagements.

How Are Offers Negotiated?

While the chosen buyer may be granted some degree of temporary exclusivity, it is important they understand we have not rejected the other buyers at the table. Nor have we severed relations with them. To do so would ignore the commercial realities of this stage of the process since retaining this right offers you choice, which in turn influences the price, speed, and terms ultimately received. The LOI documents the major terms of the sale:

  • Confirmation of the price and terms of payment
  • Conditions precedent: matters agreed to be resolved before closing
  • Confirmation that it is non-binding, subject to a Definitive Agreement of Purchase and Sale
  • Restrictive covenants, such as noncompete clauses
  • Recognition that holdbacks, warranties, and indemnities are deferred to and detailed in the Definitive Agreement
  • An agreed period of exclusivity or no-shop clause
  • Acknowledgement of key employee retention
  • A timetable of events

Critically important is that the LOI clearly establishes the material business terms of the deal. Agreeing to agree later surrenders negotiating leverage to the other side and increases cost, time, and frustration to the due diligence and closing process. Savvy buyers view the due diligence phase as the beginning of the negotiations in an attempt to erode value agreed to in the LOI. Sequoia negotiates the major business items before accepting the LOI as a means to circumvent that strategy and to defend the value of your company through to closing.

An operating enterprise is a moving target, so what is really being sold? How is the working capital target determined and rationalized from LOI to closing? Who settles nontransferable outstanding bank advances? Does the company have redundant assets that should not be transferred? How are allowances managed for warranty expenses, obsolete inventory, bad debts, and extended or tainted receivables? How are unearned revenues factored into working capital calculations? What happens to operating versus capital leases? Short-term indebtedness versus long term debt? Inter-company transfers? These are just some of the issues that must be analyzed and documented well before the LOI phase to establish and defend the value of the company through closing. Failure to do so can ultimately result in a dramatic reduction of the negotiated purchase price at best, and a frustrated transaction at worst.

How Will Information Be Shared With Prospective Purchasers?

Once a non-disclosure agreement is signed, Sequoia will touch base with you to ensure you are ok to share the Confidential Information Memorandum and financial information. If you have any concerns, we will probe deeper into financial capacity, intent, or valuation expectations before sharing information. Once you’re comfortable, we will share information through a secure electronic data room.

Secure Electronic Data Room: Real Time Access, Real Time Results

Sequoia will compile information about your company to prepare a secured electronic data room. Content of the data room anticipates all information a buyer will require during due diligence to validate the legal and financial condition of the company, its properties and assets, and other matters to satisfy the feasibility of the proposed transaction. After a letter of intent (see next section) has been mutually accepted, the content is posted to Sequoia’s secure electronic data room to enable access by the buyer and the buyer’s advisors engaged in due diligence — typically lawyers and accountants.

Access to the data room and its contents must be provided and controlled in a secure manner. For this reason, Sequoia continuously invests significant resources to maintain a state-of-the-art technology infrastructure to host our client’s data room materials.

Our data room technology enables Sequoia to set customizable user access settings to:

Customizable User Access Settings

Expire access to documents even after downloading

Restrict saving, printing, copying

Track and audit document and user activity

Revoke documents remotely

World Class Security

Leading 256-bit AES SSL/TLS encryption technology

Two-factor password authentication

Internationally recognized security compliances (SOC 2, HIPAA, SAS70 Type II, CSAE3416)

Physically secure data storage with biometric safeguards plus multiple firewalls

Why You Need An M&A Professional?

Return on Investment
Independent studies have shown that sellers who did not engage an M&A professional ended up with less for the sale of their company. Why? The answer lies in the maxim “Whenever you create competition for something you possess, the possession increases in value.” Maximizing your return is reason enough to use an M&A professional, but here are some additional things you need to consider.

Buyers are More Sophisticated than Sellers at M&A
Our client’s companies are typically sold to strategic buyers and sometimes private equity firms. These entities are the “bigger fish” in the food chain and experienced in the process of acquiring companies like yours. Wading alone into uncharted waters is dangerous and extremely expensive.

Selling is a High Stakes Game with No Second Chance
Selling a company is unique. It is a complex mix of critical responsibilities including guarding confidentiality, engaging key employees at critical junctures, precisely timing the release of information, selling strategic value, negotiating to balance the interests of the seller and the success of the transaction, among many others. The uniqueness is compounded by the fact that when a company goes on the market and the sale doesn’t close, it becomes “damaged goods”. Potential buyers have long memories which means the current market value of the company will remain depressed for many years to come. With no second chance, getting it right the first time is paramount. Choose carefully your M&A team to execute a proven process to successfully sell the most valuable asset you possess.

Every Deal Dies a Thousand Deaths
During the sale, which lasts for many months, facts emerge, situations arise, and positions change — this threatens the basis for completing the transaction. The prospect of the sale collapsing is a burden most sellers cannot withstand on a repeated basis and usually results in capitulation to the buyer’s demands. M&A professionals are trained to be “committed but not attached” to the transaction’s success, enabling effective out-of-the-box problem solving.

He Who Represents Himself has a Fool for a Client
Related to the parable of a thousand deaths, this saying borrowed from the legal profession is unequivocally applicable in the sale of a company. Sellers have a huge financial stake in the outcome of the transaction. When acting alone, the seller’s emotional attachment to the outcome does not afford the space and time during negotiations needed to consider proposals and advance positions.

Speed Kills
Too often the instinct of the seller acting alone succumbs to the pressure of the deal and looks for a quick close. They see a small light at the end of the tunnel and want to get the transaction over quickly. Invariably, the quick decision surrenders value and many other important terms which could have been preserved through objective negotiations.

Transaction Failure
When sellers act alone in the sale of their companies, more than 50 out of every 100 sales collapse and fail to close. The buyer’s intentions were not properly qualified, some key facts about the company were not disclosed early enough in the process, some fundamental business terms were not clearly defined, some key employees thwarted the process, or the transition of material relationships were improperly handled. There are a litany of reasons deals go off the rails when the parties entering the transaction do not plan carefully and fail to anticipate roadblocks in advance.

1,000 Hours to Close a Sale
Successfully closing the sale a mid-market company takes 800 – 1,000 hours of focussed effort. Without the help of an M&A professional, that means devoting more than 80% of your time over the better part of a year to sell your company. That’s a risky, if not impossible proposition, especially when the chances of closing (and becoming “damaged goods”) are far less than 50% without a team of M&A professionals.

Knowledge of the company being for sale is an inalienable right of the seller and must be protected from suppliers, competitors, employees, etc. In our experience, however, the number one (and vastly inordinate) source of confidentiality breaches comes from the seller of the company. There is no explanation for it other than human nature. M&A professionals, on the other hand, have confidentiality in their DNA — it is the lifeblood of sustaining the transaction and M&A professionals know how and when to respond to the inquisitive and coach their clients on necessary vigilance.