Dos and don’ts of mergers, M&As and IPOs
Be prepared for anything, experts tell Ottawa entrepreneurs
Whether a company is planning to go public, raise venture capital or merge with a competitor, one overriding piece of advice always holds true, panellists at a recent Ottawa conference agreed: Do your homework.
A who’s-who of Ottawa entrepreneurs ranging from founders of fast-growing startups to executives of leading corporations gathered at KPMG’s Elgin Street office on Sept. 27 for a series of talks on mergers, IPOs and venture capital. – KAREN HENNESSEY, PARTNER AT GOWLING WLG
The various discussions all circled back to one key theme: No matter how ready you think you are for a defining event such as a major funding round, you can never be too prepared.
“I tell clients, ‘You should be thinking about your exit before the company is even founded,’” said Karen Hennessey, a partner at Gowling WLG who specializes in corporate and commercial law.
That means keeping thorough corporate records, including clearly delineated share agreements, she told the audience. Tech firms in particular need to pay special attention to ensuring their intellectual property is protected, the panellists said.
Halogen Software CFO Pete Low.
For a company looking to be acquired, it’s important to be patient and seek out the best offer, said Ed Bryant, CEO of Sampford Advisors, an Ottawa-based investment bank that focuses on M&As.
“That first call isn’t going to be your highest bid,” he said. “Be prepared. Have your list of potential buyers ready to go.”
Pete Low, the chief financial officer at Kanata’s Halogen Software, said his firm left no stone unturned in preparing for its debut on the Toronto Stock Exchange in 2013. Mr. Low said Halogen executives started building relationships with industry analysts five years before the company’s IPO because they know the business inside and out and are often the most influential group in shaping market opinions about public companies.
“It was very valuable for us as a business to learn (from analysts),” he said.
Public companies are also under heavy scrutiny from the media, shareholders and regulators, Mr. Low added, a fact of life that private firms don’t have to worry as much about.
“It’s something you’ve got to get used to and embrace,” he said.
Experienced advisers are essential for companies looking at going public to help prepare them for the challenges that lie ahead, Mr. Low said. The Halogen team spent many hours talking to CEOs and CFOs from a host of public companies about what to expect after putting their shares on the market, he told the crowd.
“You can all learn from each other,” he said.
You.i TV co-founder Jason Flick said young businesses have access to a variety of sources of funding, including federal money from the Business Development Bank of Canada and the Industrial Research Assistance Program as well as private investors.
“Look at the right vehicles that are available,” he urged startup founders.