Insights

Canadian, Eh?

Steps to Selling your Business Part 8.

If you have been reading this series so far, you know the importance that Stillwater places on understanding your business’s story when it comes to optimizing conditions for its sale. This understanding comes from observing the details and data points in your numbers and from examining your history and trajectory. Exercising this type of professional curiosity around human nature means that we get to pick up exciting perspectives along the way.

Great M&A Advisors consider client’s potential cultural nuances, along with those of prospective buyers. Every culture has its own unique behaviors that can (and do) impact the ways that we conduct business.

As a firm, we have observed several uniquely Canadian behaviours when it comes to business. As a company, Stillwater deals with many cross-border transactions, and we are part of a larger global organization, Geneva Group International. This affiliation gives us a chance to step out of the Canadian theatre of operations. It brings valuable perspective, which we would be foolish not to learn from.

This week, we will highlight three bad business habits we have observed that Canadians, particularly, are in danger of developing.

1. Canadians are Attracted to Value Over Quality

We repeatedly see in Canadian buyers an attitude that a cheap buy is a good buy. There may be some praiseworthy optimism in this approach—perhaps with hard work, you will make something spectacular out of a bargain. Still, we see people diving for a good-looking deal more often, without first considering whether it is the best fit. If it’s not a good fit, hard work will not turn a company into a success story. Our philosophy is that it is better to pay 20% more for a great business than 20% less on a bad one that will go nowhere. Sadly, that bit of common sense isn’t always ‘the Canadian way.’

2. Canadians Manage to the Downside

A few years ago, we sold a Canadian business that, 30 years into its life, had reached $20+ million in annual revenue. One of the strategic buyers we brought in was a man out of the US who, over the course of 10 years, had built a business very similar to our seller’s. The difference? His company was doing a billion dollars in revenue.

Some American bravado in the company’s management approach was one factor in their success. However, that wasn’t the only difference.

In Canada, it seems we take the opposite position, managing to the worst-case scenario. We care about safety; our attitude is protective and over-careful because we don’t know what tomorrow holds. There is good sense in that mentality for a business owner: you want to guard against wild fluctuations and dampen the ups and downs. At the same time, it can flatten the trajectory of your growth.

3. Canadians let Their Conservatism Dictate Their Decisions

We often see classic Canadian conservatism rear its head at the negotiating table to the benefit of no one. We are not talking about political or ideological conservatism, but a behavioural conservatism: timidity, a desire to ruffle no feathers, and the politeness Canadians are famous for.

Recently we worked on an analysis of a Canadian company and noticed that their forecasts only included 50% of the value of most orders. When we asked why they told us that they wanted to be “conservative” with their numbers in the face of potential unknowns.

You don’t get points for conservatism when you are selling your business.

Consequently, we restated their numbers, ensuring their financial statements represented our best perspective of their future. This correction horrified some of the company’s senior staff, not because there was anything unethical happening, but simply because it was a violation of that unspoken Canadian code of behaviour that tells us under-promise and over-deliver, as though the only alternative was unbridled, euphoric optimism. In the end, we showed prospective buyers the adjustments, and they were accepted without blinking, to the delight of our sellers.

We are big believers in politeness and gracious conduct. However, we reject the idea that there is an inherent advantage in passively agreeing with everything or understating the future.

A great M&A Advisor will push you and will also push prospective buyers.  Your Advisor must have the cultural intelligence to understand how to best position your company to prospective buyers in a way that honors and respects both parties.

We are proud Canadians, and we love to talk about what makes our country unique. As a Canadian business, we want to be remembered as one who fights – politely, respectfully, but fiercely – for ALL business owners to ensure they are fairly compensated for their life’s work.


In our next installment, we will examine how a great M&A Advisor will work with integrity and use their expertise to present your company’s future to prospective buyers.