Dos and don’ts of merg­ers, M&As and IPOs

Be pre­pared for any­thing, ex­perts tell Ot­tawa en­trepreneurs

Ottawa Business Journal - - SPECIAL REPORT | SMALL BUSINESS WEEK - BY DAVID SALI david@obj.ca

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.

FILE PHOTO

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