Craig Maloney, Managing Director, MNP LLP

This month, we spoke with Craig Maloney, Managing Director at MNP LLP.

Tell us about MNP LLP.

MNP is a leading national accounting, tax and business consulting firm with over 70 offices strategically located in urban and rural centres throughout Canada. In the Atlantic region, MNP merged with local accounting firm WBLI in January 2017.

Nationally, MNP has approximately 5000 team members across Canada, and continues to grow. Our locations are a direct reflection of Canada’s economic landscape to ensure we are in the markets to support local business and key industry sectors.

What is the mergers and acquisitions (M&A) / transactions market like currently?

It is a seller’s market… and it has been for several years. Generally speaking, there are fewer business owners selling in the marketplace and there are numerous buyers seeking to purchase a business. Buyers include entrepreneurs (individuals seeking opportunities); strategic buyers (other businesses looking to acquire competitors); and private equity groups (entities that own various business interests).

Based on this dynamic and following the laws of supply and demand – business values are up.

Financing is generally readily available, and banks are aggressive and competitive. Further, banks are getting better at financing cash flow (goodwill), which means that buyers are able to finance larger transactions with smaller amounts of equity.

Nearly 70% of business owners in Atlantic Canada are over 50 years old – which is higher on average compared to the rest of the country. This seller’s market dynamic will likely shift over the next number of years as baby-boomers look to exit their business and the active buyers in today’s market will either find a business to purchase or pursue other ventures, including starting up a business.

What are thee pieces of advice you would give someone that is looking to transition their business?

1. Plan ahead.
   • It takes longer than you expect to properly prepare for a transition.
   • Be ready for an exit/transition at any time.
   • Revisit your plan on a somewhat regular basis, as life changes. Industries change, businesses change, and family dynamics change. The plan must evolve also.
2. Hire good people and make yourself redundant.
   • Train your managers to be able to replace you. Ensure that your customers do business with the Company and not you.
   • Transition the key roles, relationships and duties to key managers over time. A business that is not reliant on one or two key individuals is generally worth more and will be easier to transition/sell.
   • The old mantra used to be: what would happen to the business if you were hit by a bus? I like to ask the question in a bit more of a positive light: are you able to go on vacation for 4 weeks with little to no contact/input in the day-to-day operations of the business? This is a key test.
3. Do what you want and not what is expected of you.
   • If you would like to sell a portion of the business today (“take some chips off the table”), and work for another 5 years in the business, then that this what you should do.

What three pieces of advice would you give to a person looking to purchase a business?

1. Pursue and purchase a business that you will be passionate about.
   • Passion will make the long hours, hard work and commitment much easier.
   • Be disciplined and structured in the approach. Do not get “deal hungry”; it is better to wait to find the right business opportunity than to jump into a business that is not the right fit – be it the industry, geographic location or the price.
2. Get advice.
   • Don’t over pay for a business opportunity. Engage advisors to assist you with the valuation, negotiations, and structure of the business.
   • Do proper due diligence on the business. Ensure that you understand and/or mitigate against most of the business risks. Due diligence is similar to a home inspection and home insurance when buying a home.
3. Ensure that you obtain proper financing.
   • You want to diversify your risk by partnering with a banking institution, but do not over-lever, such that you are stressed to make payments.

Learn more about MNP LLP