January 2020

Series for Business Owners

Selective Disclosure Secures Top Dollar

Most owners of medium sized businesses in Canada are now in their 50’s. Over half of them have indicated, within the next 5 years, they plan to sell their business to fund retirement, the majority to an outside third party.

Selling a business is a complex task. Many owners have never been through the process before. The stakes are big - their ability to comfortably retire by securing fair market value for the business they spent most of their working lives building.

Selective Disclosure Secures Top Dollar

Some mid-market divestiture brokers in Canada have taken to advertising bulletins of ‘Businesses for Sale’ on their company websites providing detailed descriptions of the business itself, and actually disclosing top line sales and profitability numbers to the world at large.

Business owners are not well served by such tactics. Confidentiality is compromised before negotiations even begin; with several clicks on industry research, most readers can make an educated guess on the actual business for sale. Needless disclosure to predatory competitors, employees, key customers and suppliers serves to do nothing but destabilize day to day operations. If a divestiture advisor is reduced to taking an MLS approach to finding a buyer, something is fundamentally wrong. Valuation increases with post purchase synergies realized from strategic buyers within the immediate, or a related, industry. If a private equity buyer is approached, the same principle applies; best if they can leverage other portfolio investments.

Before approaching any prospective buyer, the following steps should be taken:

  1. Extensive review of strategic buyers within the industry to determine which prospects are best positioned to leverage the assets of the company for sale.

  2. Without disclosing the name of the company, an initial approach to the senior management of screened prospective buyers with non-disclosure to follow.

  3. Even after the non-disclosure is signed, a phased approach to disclosing information which ensures only well qualified buyers see the most confidential information.

The value of a business varies significantly based on the purchasing party. Selective disclosure and a carefully managed process secures top dollar. Even for a medium sized transaction, the upside for business owners can be in the millions.

Rincroft facilitates the divestiture of medium sized businesses. Our clients are companies which are well established and profitable. Since its inception, our company has completed the sale of more than 50 business across a wide range of industries. We also provide advisory services assisting owners in building sustainable value even if they have no immediate plans to sell.

Find out more at

Phone: 519-572-3093
e-mail: coneill@rincroft.com