1. Continuity and Stability:

A strong management team provides a sense of continuity and stability to the business, the other team members, and a prospective purchaser. When potential buyers or successors assess a company, they look for evidence of a well-functioning team capable of sustaining operations without significant disruption. A cohesive and experienced management team instills confidence, reducing uncertainties and risks associated with a change in leadership.

  1. Operational Excellence:

Effective management is the backbone of operational excellence. A competent team ensures that day-to-day activities run smoothly, maintaining productivity and efficiency. When preparing a business for succession or sale, potential investors or buyers scrutinize the operational prowess of the team. A robust management structure demonstrates the business’s ability to navigate challenges and capitalize on opportunities, making it a more attractive proposition.

  1. Customer and Employee Confidence:

Customers and employees alike place trust in a business with a strong management team. During a transition, this trust becomes particularly vital. A well-led team is more likely to maintain positive relationships with existing clients and employees, assuring them that the company will continue to deliver quality products or services. This confidence is invaluable during succession or a business sale, as it minimizes the risk of customer and employee attrition which is always a concern of prospective buyers.

  1. Strategic Vision and Planning:

A competent management team is instrumental in crafting and executing strategic plans. Prospective buyers or successors seek businesses with a clear vision for the future and a strategic roadmap to achieve goals. A management team that is adept at strategic planning adds substantial value to the business, making it an attractive prospect for those looking to invest or take over the reins.

  1. Risk Mitigation:

The business landscape is fraught with uncertainties, and a strong management team plays a critical role in identifying and mitigating risks. This capability becomes especially crucial during a succession or sale, where potential risks can impact the transaction. A team that can navigate challenges effectively ensures a smoother transition, safeguarding the business’s value and reputation.

  1. Adaptability to Change:

Successful businesses are those that can adapt to change swiftly and effectively. A management team with a track record of adaptability is an asset when planning for succession or a business sale. The ability to embrace change, respond to market dynamics, and capitalize on emerging trends positions the business as a resilient and forward-looking investment.

In conclusion, when planning for succession, the importance of a strong management team cannot be overstated. It is the linchpin that holds the fabric of the business together, ensuring continuity, stability, and the ability to withstand an ownership transition successfully.  

When it comes to purchasing a company, there are several factors to consider, and the process can be complex and time-consuming. One of the most important decisions that prospective buyers need to make is whether to use an M&A advisor. Below we’ve compiled a list of some of the ways an M&A advisor can be beneficial in your pursuit to acquire a private company.

  1. Access to Opportunities – M&A advisors have an extensive network and can leverage their contacts to access a pool of potential acquisition targets that prospective buyers may not be able to reach on their own. This can help ensure that buyers have access to a broad range of opportunities that fit their target criteria, increasing the likelihood of finding the right business to acquire.
  2. Expertise and Experience – Using their deep understanding of the market, M&A advisors can provide guidance and support throughout the transaction process, from qualifying potential targets to analyzing company information and negotiating and closing the deal. M&A advisors can use their experience to help buyers navigate the complexities of the acquisition process, ensuring that they make informed decisions and avoid common pitfalls.
  3. Valuation Expertise – M&A advisors have a deep understanding of the factors that influence the value of a business, and they can help buyers determine a fair market value for the company they are considering acquiring. This includes a thorough analysis of the company’s financial performance, industry trends, and comparable transactions. An M&A advisor can help buyers make informed decisions about the value of the company they are considering acquiring, ensuring that they pay a fair price for the business.
  4. Deal Structuring and Negotiation – Once a target has been identified, an M&A advisor can help with structuring and negotiating the terms of the transaction. This includes developing a letter of intent to present to the target, which outlines the purchase price and payment terms of the deal. An M&A advisor can help ensure that the deal is structured in a way that meets the needs of both the buyer and the seller and that the transaction is completed smoothly and efficiently.
  5. Due Diligence – One of the most critical aspects of buying a company is conducting due diligence, which involves a thorough investigation of the company’s financial and operational performance, legal and regulatory compliance, and other factors that may impact the value of the business. An M&A advisor can help conduct and manage the due diligence process, ensuring that the buyer has a thorough understanding of the company they are considering acquiring and identifying any potential risks or issues that may impact the transaction.

For many reasons, using an M&A advisor can provide significant value in the process of acquiring a private company. From access to opportunities to valuation expertise and due diligence capabilities, an M&A advisor can help buyers navigate the complexities of the acquisition process and reach a successful outcome. If you’re considering acquiring a company, our team would love to connect with you to discuss how we can help you achieve your goals.

Selling a small to medium-sized private company can be a complex and time-consuming process. For many business owners, the sale of their company is likely the most significant financial transaction of their life, and getting it right is crucial. Below we will discuss the value of using an M&A advisor when selling a small to medium-sized private company.

  1. Expertise and Experience – One of the primary benefits of using an M&A advisor is their expertise and experience. M&A advisors specialize in the sale of businesses, and they have a deep understanding of the market and the process involved in selling a company. They can provide guidance and support throughout the entire process, from preparing the company for sale to negotiating the deal and closing the transaction. The team at Confederation M&A has closed over 100 deals across many industries in the last 10 years.
  2. Confidentiality – Selling a business can be a sensitive matter, and maintaining confidentiality is essential. An M&A advisor can help ensure that the sale process is kept confidential through the use of non-disclosure agreements, a secure virtual data room, and by only approaching qualified buyers with information about the company for sale. Working with an M&A advisor will help protect the company’s reputation and prevent employees, customers, and suppliers from becoming aware of the sale until the deal is complete.
  3. Access to Buyers – One of the most significant challenges in selling a business is finding the right buyer. M&A advisors have an extensive network of contacts and can access a pool of potential buyers that business owners may not be able to reach on their own. This can help ensure that the company is marketed to a broad audience, increasing the likelihood of finding the right buyer. Confederation M&A maintains a buyer database with thousands of prospective buyers, including individual buyers, financial buyers, and strategic buyers.
  4. Valuation Expertise – M&A advisors have a deep understanding of the factors that influence the value of a business, and they can help business owners determine a fair market value for their company. This includes a thorough analysis of the company’s financial performance, industry trends, and comparable transactions. An M&A advisor can help business owners set a realistic asking price and negotiate a deal that maximizes the value of their company.
  5. Deal Structuring and Negotiation – Once a potential buyer has been identified, an M&A advisor can help structure the deal and negotiate the terms of the transaction. This includes developing a letter of intent, negotiating the purchase price and payment terms, and navigating any legal or regulatory issues that may arise during the sale process. An M&A advisor can help ensure that the deal is structured in a way that meets the needs of both the buyer and the seller and that the transaction is completed smoothly and efficiently.

It is never too early to have a discussion with an M&A advisor on selling your business. In fact, at least three years from the sale is ideal to be sure you are maximizing salability and your after-tax proceeds. From an advisor’s expertise and experience to access to buyers and valuation knowledge, an M&A advisor can help business owners navigate the complexities of the sale process and achieve a successful outcome.

What is Alternative Minimum Tax?

As the name implies, alternative minimum tax (AMT) is an alternate way to calculate taxes to ensure that higher income earners pay a minimum amount of tax when benefiting from certain deductions, including the lifetime capital gains exemption (LCGE). Beginning January 1, 2024, there are new changes taking place that could impact your after-tax proceeds when selling your business.

At high-level, the following changes are proposed take place, as outlined in the 2023 federal budget:

AMT will still be eligible to be credited against high-rate income tax over the following seven years; however, it will be much more challenging to plan for some that are selling their business.

For Example:

For someone with income from other sources over $173,000 who then claims a $1M in exemption (LCGE per individual is expected to be greater than $1M in 2024), there will be approximately $80K in AMT plus approximately 1% for capital gains above the exemption, depending on your province.

Key Takeaway:

Depending on the structure of your business, you may want to consider getting a deal in place to sell your business before the end of the year to avoid triggering potentially high levels of AMT payable.

Mergers and acquisitions (M&A) can be a powerful growth strategy for companies looking to expand their market share, diversify their products or services, and increase profitability. By acquiring or merging with another company, a business can rapidly increase its scale and capabilities, and gain access to new markets, technologies, and resources. Here are some ways in which businesses can utilize M&A as a growth strategy:

  1. Expand Your Market Share – M&A can be an effective way to increase your market share and become a dominant player in your industry. By acquiring a competitor or merging with a complementary business, you can increase your customer base, distribution channels, and market reach.
  2. Diversify Your Products or Services – M&A can also be a way to diversify your products or services and reduce your dependence on a single product or market. By acquiring a company that offers complementary products or services, you can expand your offerings and create new revenue streams.
  3. Gain Access to New Technologies or Resources – M&A can be a way to gain access to new technologies, resources, or expertise that can help you stay competitive in your industry. By acquiring a company that has a strong technology platform or expertise in a particular area, you can enhance your capabilities and stay ahead of the competition.
  4. Achieve Cost Savings and Operational Synergies – M&A can also be a way to achieve cost savings and operational synergies. By combining operations with another company, you can eliminate duplicate costs, streamline processes, and improve efficiency.
  5. Enter New Markets – M&A can be a way to enter new markets or geographies that are difficult to penetrate through organic growth. By acquiring a company that has a strong presence in a particular market, you can gain access to its customer base, distribution channels, and local knowledge.

However, M&A also comes with risks and challenges, including integration issues, cultural differences, and financial considerations. It’s important to carefully evaluate the potential benefits and risks of any M&A transaction and to have a clear plan for integration and execution. Here are some tips for successfully utilizing M&A as a growth strategy:

  1. Conduct Thorough Due Diligence – Before entering into any M&A transaction, it’s important to conduct thorough due diligence to ensure that you are fully aware of the potential risks and opportunities. This includes financial, legal, tax, operational, and cultural due diligence.
  2. Develop a Clear Integration Plan – It’s important to have a clear plan for integrating the acquired company into your existing operations. This should include a timeline, milestones, and clear communication with all stakeholders.
  3. Address Corporate Cultural Differences – M&A transactions often involve bringing together companies with different cultures and ways of doing business. It’s important to address these differences and find ways to create a cohesive and productive team.
  4. Evaluate the Financial Implications – M&A transactions can be expensive and may have significant financial implications. It’s important to carefully evaluate the financial impact of any transaction and to have a clear plan for financing and capitalization.

In conclusion, M&A can be an effective growth strategy for businesses looking to expand their market share, diversify their products or services, and increase profitability. By carefully evaluating the potential benefits and risks and developing a clear plan for integration and execution, businesses can successfully utilize M&A to achieve their growth objectives.

Geoff Gross



Selling a small to medium-sized private business can be a complex and challenging process, with many potential pitfalls along the way. In order to maximize business value and avoid common mistakes, it is important to approach the process carefully and with a clear strategy in mind.

Avoiding Common Mistakes

  1. Failing to Plan Ahead: Selling a business requires careful planning and preparation, and failing to plan ahead can lead to significant challenges and delays in the sales process. It is important to take the time to carefully consider all aspects of the sale, including financial statements, tax implications, legal considerations, and marketing strategies.
  2. Overvaluing the Business: Overvaluing a business can lead to unrealistic expectations, which can result in a longer sales process and fewer offers. It is important to be realistic about the value of the business and to work with a qualified M&A advisor to determine a fair and accurate value.
  3. Neglecting Due Diligence: Due diligence is a critical part of the sales process, and neglecting it can lead to unexpected surprises and delays. It is important to be transparent and forthcoming with potential buyers, and to provide them with all necessary information and documentation in a timely manner.
  4. Failing to Market the Business: Marketing is a key component of the sales process, and failing to effectively market the business can result in fewer offers and a lower sale price. It is important to work with a qualified M&A advisor to develop a comprehensive selling plan that reaches potential buyers through a variety of channels.
  5. Not Considering the Tax Implications: Taxes can have a significant impact on the sale of a business, and failing to consider the tax implications can result in unexpected expenses and lower net proceeds. It is important to work with a qualified tax advisor to understand the tax implications of the sale and to develop a strategy in advance of selling to minimize tax liability.

Maximizing Business Value

  1. Prepare Accurate Financial Information: Preparing accurate and detailed financial information is critical to demonstrating the value of the business to potential buyers.
  2. Focus on Growth Potential: Demonstrating the growth potential of the business is a key factor in maximizing its value. This can include highlighting new products or services, expanding into new markets, or leveraging new technology or trends.
  3. Build a Strong Management Team: A strong and capable management team is critical to the long-term success of the business, and can also increase its value to potential buyers. It is important to invest in training and development for key personnel and to build a deep bench of talent to ensure a smooth transition for new owners.
  4. Identify and Address Weaknesses: Identifying and addressing weaknesses in the business can help to increase its value and make it more attractive to potential buyers. This can include addressing operational inefficiencies, improving marketing and sales strategies, or investing in new technology or equipment.
  5. Work with a Qualified M&A Advisor: Working with a qualified M&A advisor can help to maximize the value of the business and ensure a smooth and successful sale process. An experienced advisor can provide valuable guidance and support throughout the sales process, from valuation to marketing to negotiations and closing.

Selling a small to medium sized private business can be a complex and challenging process, but by avoiding common mistakes and focusing on maximizing business value, it is possible to achieve a successful outcome. It is important to approach the process with a clear strategy in mind, clear expectations and to work with qualified professionals to ensure a smooth and successful sale.

Charles Ackerman



Business owners know that key employees are integral to their business. Businesses rely on key employees to keep their business running smoothly, customers happy and suppliers satisfied. A common theme we hear from business owners exploring a sale is that they want to make sure that their employees are treated well by a new owner.

A key issue for many business owners in the post-COVID-19 world has been employee retention. There are more opportunities than ever for employees to make a change. This makes employee retention even more critical in any business and even more so if you are thinking of selling or in the process of selling your business.

On the flip side, buyers are hyper-concerned about whether or not the business’s employees will stay with the company through a transition. Buyers are troubled by employee turnover and will consider high turnover a risk if you are continuously replacing your top talent, ultimately decreasing your business’s overall value.

Business owners should get to know their employees to understand what motivates them. An owner’s first thought is often to increase salary, and while that can be a motivator for some employees; employers should consider the employees’ compensation package as well as other motivational impacts. We have considered these elements as key to employee retention:

If you are selling your business that has a strong management team in place, the transition period to a new owner should be smoother and require less of your time post-closing. Business owners selling their business without key management in place are generally required to stay on longer with new owners, often upwards of 6 to 24 months.

Ultimately, employee retention is important at any stage of business. But for owners contemplating a sale, a strong record of retention can lead to a higher valuation and a faster transition period.

Trisha Mossey



Nov 1, 2022

In January 2022, Andrew Bonnell and Heather MacAulay purchased Sterns Laundry (Sterns), in Charlottetown, Prince Edward Island. Sterns is PEI’s only dry cleaner and commercial laundromat servicing the general public and clients such as hotels, restaurants, nursing homes and production plants. Sterns is one of Charlottetown’s longest-running operating businesses.

Confederation M&A was engaged as sell-side advisors, representing Terry and Nora throughout the process of selling their business which had been in their family since the 1960s. Selling the business was not a decision taken lightly given their family history and the legacy of Sterns that they would be passing on to new owners.

Trisha Mossey sat down with Terry, Nora, Heather and Andrew to see how everyone is doing since the transition of the business.

Trisha: Sterns carries such a long legacy in Charlottetown and throughout PEI. Can you tell us a bit about your family’s history with Sterns and the milestones throughout your family’s ownership?

Terry: My dad worked at Sterns while he was going through college to help pay for his education. When he graduated, he kept working at Sterns until he got married. Dad shifted gears and ran a funeral home for a while until they lost a son which would have been my second oldest brother. After losing a child, he wanted to get out of the funeral home business. Pick McCormick was the owner of Sterns at that time and offered Dad the manager position at Sterns – Dad began his full-time career there in the early 1950s.

Around 1961, Pick passed away from a major heart attack and had no family members interested in Sterns. Pick’s wife and dad came up with a deal to purchase Sterns – I believe the purchase price was $61,000.

Dad always said he instantly became a maintenance man, laundry washer, truck driver and bookkeeper. His motto was to be the first one there to greet the staff and customers and the last one to leave to thank the staff and customers. Back then, Charlottetown had 5 or 6 dry cleaners and Sterns was the only business offering commercial laundry service. Dad saw this as a growth opportunity and ended up buying out the other local dry cleaners.

Trisha: Andrew and Heather, you folks are a busy family of 5, and each have your own businesses prior to purchasing Sterns – what made you want to explore purchasing a new business?

Andrew: We always knew that we wanted to find an additional investment to complement our existing business portfolio. When Sterns was presented as an option it felt like the right fit and timing.

Trisha: Reflecting on your decision to sell the business to someone outside the McKenna family – I am thinking that was not an easy decision. What led you to your decision to sell your business?

Terry: The decision to sell was difficult as Sterns had been in our family for basically 60 years. But we knew that there always would be a time to look at selling. When Covid hit and Nora’s health issues came along we both knew it was the right time. We also knew that Sterns needed some new blood at the top to keep it going for another 60 years. After we met Andrew and Heather, Nora and I looked at each other and said ‘Jesus they were us back 20 years ago when we purchased Sterns from my father!’

Trisha: It’s been almost a year since purchasing Sterns – how has your first year been going? How was the transition between yourselves and Terry and Nora?

Heather: From day one, we planned to take the first year in stride to truly learn the intricacies of the business. We feel extremely fortunate to have maintained key staff members through the transition. We are also grateful for a positive relationship with the McKenna’s. We have an open relationship and feel comfortable calling for advice or guidance at any time.

Trisha: How do you hope the legacy of Sterns will continue into the future with Heather and Andrew?

Nora: The family legacy at Sterns I think is very important. We knew how important each customer was to Terry’s father. He worked hard each day to give great value and quality service. He never signed a contract throughout his years owning Sterns, all of his business was done on a handshake and we carried that on until the day we sold!

Trisha: You and Heather are a couple of months away from your first anniversary at Sterns! What have been some of your lessons learned so far?

Andrew: Every day we learn something new. The biggest lesson to date is to take everything in stride and be ready to roll with whatever comes our way.

Trisha: Terry and Nora, after almost a year – how does it feel to have a change of pace?

Nora: It has been close to a year now since being semi-retired and we still talk about our old business on occasion. We have had some communication with the new owners when they have questions. All in all, we are happy with our decision and know the business is in good hands with Heather and Andrew and with the great staff.

Trisha: What led to your decision to hire an M&A Advisor and how did you find the experience?

Terry: Our decision to hire Confederation M&A was finally made when I had a discussion with a good friend about selling the business. He told me not to go anywhere else, and to hire Confederation M&A right away, which I did and it was great advice. I have had discussions with a few other business owners who approached me on how we proceeded to sell our business and it’s a short discussion, call Trisha at Confederation M&A and set up an initial meeting they will take it from there!

Trisha: From a buyer’s perspective, how did you find the experience of purchasing a business through Confederation M&A?

Heather: The buying experience provided by Confederation M&A was superior. From the first call to the last call, we felt well-informed, and educated on the process.

Trisha: What advice would you have for anyone looking to purchase a business?

Heather: Wait for the right time and fit. Owning a business is a lifestyle and it’s important that the business aligns with your goals. Find a team of professionals to help you through the process such as financial, business, and legal advice.

You can practice some back-of-the-napkin math to value a company, but it’s not always reliable. A company with $3 million in EBITDA (earnings before interest, taxes, depreciation and amortization), may, as a general rule of thumb, sell at a 4x to 6x multiple. In other words, it might sell for $12 million to $18 million in an average market.

If the company doesn’t have any outstanding qualities that make the business attractive from a buyer’s point of view (i.e., no management team, lumpy sales, no recurring revenue), accepting an unsolicited offer in this value range could make sense. But if the business does have a number of value drivers (see “Drivers of Business Value” blog), you’ll typically get better results on the open market.

Double the offer. We recently represented a software company that had received an unsolicited offer from a company in their industry. Prior to our involvement, the strategic buyer offered a standard multiple of roughly 3.5x to 4x EBITDA.

The owners weren’t sure how many people would want to buy their company and figured they’d probably move forward with the deal. But as the owners got into diligence, they began to feel uncomfortable and long story short, the deal ended up falling through.

We were brought into the process afterward and demonstrated where the buyer’s offer was weak (they were undervaluing some of the profit, for example), and ran a competitive M&A process instead. Multiple buyers came to the table and the business sold for almost double the initial offer.

So why did the company value ultimately come in so far above standard benchmarks? As a software company with many long-term customers, there was a certainty of future cash flows. Their customer base largely consisted of very sticky-stable government clients with little risk of customer default providing consistently high margins.

Plus, the owners were willing to stick around and manage the business post-transition, making it possible for a private equity firm or other non-strategic buyers to acquire the company. In all, several qualities in the business itself, plus certain conditions in the external market allowed us to position the company in a very attractive light, generating a value far above “normal” EBITDA multiple expectations.

Check before you accept. By definition, not every company is worth more than the average. If you get an unsolicited offer, get a second opinion before you accept. Ideally, you would talk to an M&A firm that’s represented businesses of your size and complexity.

If it’s a reputable firm and they see it’s a good offer, they’ll tell you. Sometimes unsolicited offers can make the most sense for buyer and seller. But don’t let a buyer pressure you into moving too fast. Give yourself time to get more information and a complete understanding of the offer.

Know your business’s value. Pulling a multiple on EBITDA is the most simplistic form of doing a valuation, but it doesn’t tell the whole story. It doesn’t account for standout business qualities that drive up value, and it doesn’t account for current market dynamics.

If you own a business, it’s a good idea to get an estimate of value every few years. Knowing what your business is worth (and what’s behind that value), can help inform your growth plans. Alternately, you may also find the business is worth more than you expected – and accelerate your exit plans.

Jeff MacKenzie


If you are a business owner, building value is surely top of mind whether you intend to sell in the near term or not. Determining your company’s worth can be personal – especially if you founded the company and have poured countless hours of sweat equity into it. Yet, any investor or buyer will need to feel comfortable that the business offers a product or service with proven demand and can continue to generate consistent revenue after an ownership transition.

As noted in our recent blog post “Drivers of Business Value”, incorporating a recurring revenue model is a strategy that can help your business achieve a stronger valuation. Revenue growth is great to have, but what business owners often don’t focus as much on is the predictability of their revenue. That’s what recurring revenue is all about – decreasing risk by making your future revenue streams safer and more predictable.

Here, we will discuss the benefits of recurring revenue, how it may increase your business’ worth to investors, and ways to consider adding a recurring revenue model to your business.

What is Recurring Revenue?

Recurring revenue represents sales income that is stable, consistent and expected to continue. This type of revenue is different than one-off sales revenue as it occurs at regular intervals and is more predictable, offering financial security that feeds into the future stability of your company.

It is also important to highlight the difference in ‘recurring revenue’ and ‘re-occurring revenue’. Take the example of a favorite grocery or clothing store you regularly visit. While the business may not be sure exactly when you’ll be back, as a repeat buyer there is a good chance you will shop there again and therefore represent a re-occurring revenue stream. The difference in recurring revenue, and what makes it more valuable, is these customers buy from you on a pre-established and usually automatic basis, typically backed by a contract or subscription (such as Netflix, Spotify, Cell-phone plans, etc.).

Your monthly gym membership is a simple example of recurring revenue; the income comes in each month, regardless of how often a member uses the gym. Service contracts and legal agreements are longer-term examples of recurring revenue. Some common examples we see are:

The Importance of Recurring Revenue for a Prospective Buyer

While your business may have a strong and prosperous history, confirmation of expected demand and financial stability is vital to the investment appeal from a buyer’s perspective. With a recurring revenue model in place, investors are able to better understand and model:

A key priority for any investor is to reduce the risk and increase the return associated with their investment. The above elements are examples of ways to help de-risk a transaction, which will in most cases give a buyer greater comfort to present a higher price and more favourable terms.

Making Recurring Revenue Work for You

Implementation of a recurring revenue model can take many different shapes and forms. For your business it might mean shifting to a membership-based business model, establishing long-term contracts for your service offering, or offering subscriptions for repeat shipments of your product.

Whether you are planning for the sale of your business or not, recurring revenue can be a very valuable asset to your business and enhance your day-to-day operations significantly. The security and predictability derived by a recurring revenue model not only makes your business more appealing to an investor, but also much easier to operate and scale.

Jill Bourchier, CPA