The Expert Interview Series

Welcome to the Expert Series from Selling Your Canadian Business. Our book lays out the expert team of advisors every Canadian business owner needs in their corner. This series brings those experts into the conversation one at a time. Disclaimer: This series is for educational purposes only and is not professional advice. Always consult qualified professionals. Find our book and more resources at sellingyourcanadianbusiness.ca. Here is your host.

Hello everyone. I'm David Provost from the Shaughnessy Group. And this is the Expert Interview Series. This is our opportunity to interview the experts who help business owners grow and eventually exit their business. Today's guest is Bob Gauvreau from Gauvreau Accounting Tax Law Advisory. He is a CPA based in Ontario and he runs a virtual CPA firm that serves all across Canada. Bob, thanks very much for joining us.

Always a pleasure to connect, David.

Bob, tell us a little bit about who you are and how you got to what you're doing today.

Yeah, no, thank you. And a pleasure to be here for sure. So, I started my firm in 2008. I left working at a multinational firm, not because it wasn't great, it just, you know, wasn't really aligned with who it was that I am and the direction that I wanted to go. I really wanted to focus on working with business owners Not nonprofits, not governments, just exclusively in that business owner space. So 2008, I took the leap. I started my own firm, and I'll fast forward to today. We're a team of about 200 professionals with 2 major offices, one in Peterborough, Ontario, and the other in Winnipeg, Manitoba, with what we're calling the one-stop shop of professional services. So from financial reporting, bookkeeping, CFO services, complex tax restructuring, you know, whatever it is that you need to support you and your business, we can offer it from a professional services side. And then Ontario, we've got a little caveat. We've got a law firm in Ontario that's part of our team as well.

Excellent. So you talk a lot about proactive versus reactive tax planning. We both deal with a lot of business owners that maybe, maybe within 5 years of a potential business exit, What does that look like to you, being proactive versus reactive, and how can that help them?

Yeah, you know, unfortunately a lot of accountants, and I am one, you know, we, we get into a bit of a routine, and even some of my departments get into routines of compliance work. And a lot of times CPA firms, they just do the regular tax filing and that keeps them busy, and it's constantly they're dealing with deadlines. So as part of that, they They're just going through and they're dealing with, you know, 6-month-old information. They're processing it, they're minimizing tax, and then they're, they're moving on to the next engagement. And that's reactive, right? Um, proactive to me is getting in front of it, having ongoing conversations, providing advisory services, CFO-level guidance to businesses as they're making decisions and being part of that, being the, a strategic advisor who can help provide insights and financial, um, financial oversight, and maybe even some financial guidance in making strategic decisions. So, you know, planning ahead of time instead of trying to minimize the issues of, of a current situation. And, you know, one area that you and I would always see is whether people are looking to exit a business or looking to buy a business. And when people go to exit a business and they're being reactive, it's like, We're just— we now have a buyer, we're going to sell. That's where a lot of problems happen. And our job is to make sure that proactively we're solving those problems before they ever become problems.

And one of the good reasons to be proactive is the lifetime capital gains exemption, which we both like as accountants. It's one of the few breaks that the government gives us. But qualifying for it, not everybody automatically qualifies for it. And it's very easy to trip up over those qualification rules. Talk to us a little bit more about some of the ways that you help people navigate through that.

Yeah, so $1.25 million is the new number, which is exciting, right? So if you are a shareholder and you own the shares of a corporation personally, it's a Canadian-controlled private corporation, and the time of sale, 90% of the business assets are used for business operations. they're not inactive assets, you likely qualify. But one of the trip-ups that we see all the time, David, is, um, you know, someone owns the shares of their operating company with a holding company, and the holding company can't qualify for this gains exemption because it's not an individual. So the individual then has to sell the shares of their holding company. But why is the holding company set up in the first place? Typically it's to Hold its insurance policies, maybe its real estate, likely surplus cash, protecting it, getting it in there. All of the things that will disqualify you from being eligible for the lifetime capital gains exemption. So that's one of the biggest trip-ups that we see. So one of the things that we try and do again proactively is establish the structure that's most successful to ensure that people will qualify. So one. Area that we like to focus on is actually the implementation of a family trust. And a lot of people will say, you know, Bob, uh, family trusts lost a lot of their benefits 5 years ago when the government made changes. And, and sure, you know, back then family trusts would get access to lower marginal tax rates like we all do. Super beneficial. They cut that out. That's fine. However, it's still a very beneficial structure to have in place. So What a family trust can do, it can actually own the shares of your corporation. Um, you can actually have a corporate beneficiary of a family trust. So one thing you can do is take dividends out of your operating company tax-free up into a holding company there, but you have to have the trust in place. And the other thing it can do is actually multiply that lifetime capital gains exemption. So if you have multiple beneficiaries, as part of your family trust, you don't just get $1.25 million once, you get it multiple times. So those are some of the ways that we see some issues that arise. Um, but those are also some of the ways that we can help solve that situation and proactively create a structure that's optimized for taxes.

And I think, uh, I think for a lot of business owners, that multiplication is such a huge benefit. You know, it goes without saying. And I think, you know, if as business owners maybe get more educated about some of the options open to them, you know, listening to a podcast like this, hopefully, you know, when they talk to their accountant, hopefully more than once a year, but at least once a year, should ask some questions about, you know, some of the things that are available to them if they were to maybe potentially sell their business. Because I think sometimes there's too many opportunities that go not planned well, like not being proactive. And unfortunately, sometimes people end up selling and they can't take advantage of the capital gains exemption, which is, I think, a materially big deal because of the money that we're talking about. So, I think if both advisors and business owners that are knowledgeable about this, they should have those discussions, I think, Multiple times a year.

Multiple times a year and well in advance. Right. And I'm sure, David, what you guys would see is that people come to the table and they say, okay, well, some event has taken place that's allowing us to be in the position to sell. And maybe sometimes it's voluntary, maybe others it's not. And the last thing you want to see is that somebody isn't prepared for that transaction to go through because there is, you know, for the most part, there's a 2-year holding period test. That we need to make sure. So it goes all the way back to a 2-year period. If you don't qualify, then you won't at all. And so when we think of being proactive, it's— we're talking multi-years of a planning process. And it's our job to make sure that business owners are prepared for that so that when they go to meet with someone like you to say, hey, you know what, it's time, that we don't have to wait 2 years to get access to the hundreds of thousands, if not millions of dollars. In tax savings. So, you know, making sure that we're thinking about how to exit early is so important. I, you know, one of the things I would see is that someone might— like, I'm 43 and I'm actively growing my business. And I'm always though prepared that I could sell tomorrow. And I always want to be thinking about this and have my company structured so that if, you know, the fantastic opportunity comes up where my team's taken care of, There's growth. My clients are in a position where it's maybe more valuable for them for us to accept being part of a larger organization potentially. You know, what does that all look like? I want to be able to pull the trigger and know that I'm positioned the right way. And the last thing you want to have happen is the deal of a lifetime comes up, but it's going to cost you too much to do it.

And I've always said to people, like, I think 3 to 5 years is a great time period to start. Really getting serious and thinking about it, just because there's so much stuff that really has to get done, not just tax-wise, but just operationally and improving your business that, you know, you really do need that time. So I think a lot of times for a business owner, you know, you're going to know either based on your age or how you feel or, you know, just something inside you, you're going to know like, okay, there's something coming up on the horizon. I better start thinking about this and don't leave it to the last second.

Yeah. And it's emotional, right? So for so many business owners, this is their baby. You know, you might have an actual baby, um, you know, children along the way, but like, this is really something that in most cases people have built, or maybe they purchased it, but they've expanded it. They've put their blood, sweat, and tears into it. So there's an element of this that, you know, emotion comes into play and we want to let that sort of solve itself and be prepared so that, that we can win when we do exit.

Excellent. So let's talk estate or trust planning. Um, where do you see business owners leaving a lot of money on the table and maybe what types of things can they start to think about to avoid that?

Yeah. And, you know, I sort of maybe prefaced that a moment ago to say family trusts are an important way to, to structure your business. You know, one thing that we see business owners do often is they're maybe leaving too much risk or exposure inside their operating company. And one of those ways is, is too much cash, right? There's too much cash in your operating company. Or we see that, and this happens all the time as well, you have 2 companies. You maybe have a corporation that you own personally, but you have a holding company that you own personally, and that's maybe the company real estate. But what happens is you transfer money back and forth between the 2 companies and it creates this large related party transaction account. So it's a due or to or from. And again, that situation— so surplus cash is a problem. The due to from related company is a problem. Both of those are inactive assets that aren't essential for the operating activities. They will disqualify you for your lifetime capital gains exemption. The The other one that we see is insurance planning. So when people are doing insurance planning and they're leaving their insurance policy inside their operating company, because they tend to, especially if it's a cash value policy, they accumulate in value over time. And, and some of them really accumulate in value. And one of the challenges is how do we get that out? Because if you're going to sell your business, you probably want to keep that policy.

Yeah.

Um, and also when you do go to sell your business, if it's still in there, it will disqualify you for the lifetime capital gains exemption. So we really like, um, establishing an entity and we can change it. Right. And so for anyone who's listening, if you're going, damn, Bob's talking about all the things that I have problems with and they're in, in place right now, it's okay. We can change it. It's described as a corporate restructure plan. And so we can actually take entities with all of those challenges. We can restructure them. We can pull all of those assets out. We can eliminate related party transactions. Once again, we can put a trust in place, um, and, and an invest co that's maybe a corporate beneficiary. We can clean all of this up. Um, but you want to do it sooner than later. And the reason is When we put a trust in place, and this is maybe, David, where some people go, oh, well, Bob, you told us if we sold and we had a family trust in place, we were going to get access to all these gains exemptions. And yes, if you get it in early enough, we can do that, but you can't put a family trust in and then sell 6 months later and expect that everyone's going to have this value that they can sell their shares of. Right. So just to maybe describe it for everybody. Yeah. We can take a corporation, let's say it's worth $1 million now, we freeze the value of that company. Okay, so what that means is the existing shareholders, they own that $1 million. And then what we do is we issue new shares that are growth-related. So any new value above $1 million, the new shareholders own that. So if you sell the business for $1 million, there's no benefit to the family trust being there. But if you sell it for $5 million, 5 years from now, there's a major benefit in, in there. So sometimes we see people, they just don't, they don't introduce this soon enough, or they're not thinking, you know, strategically about tax minimization on an exit. So just keep it in mind. We can fix it all. Um, our team is extremely good at fixing those situations, um, and resolving it and setting you up so that if you sell tomorrow, or you sell 5 years from now, you will always be purified and eligible for your lifetime capital gains exemption. Good planning is so important.

One of the, one of the other areas that's important is sometimes, you know, in a transaction, we have to think about asset sales versus share sales. Obviously, I think as a seller, you'd probably always want the share sale to take advantage of the lifetime capital gains exemption. But it doesn't always work that way because sometimes the buyer, depends on your type of business, they may want to do an asset deal for a number of different reasons. Sometimes it's just, you know, liability reasons, or it could be because they want to take advantage of, you know, if it's asset-intensive depreciation. So what, you know, what kind of— walk us through some of the discussions that you have with your clients about maybe how they should go plan that out. And if somebody wants to go in one direction and the other, you know, maybe the buyer wants to go in a different direction, How does that work in the negotiation?

For sure. And I want to preface this to say David and I actually met going through transactions of buy-sell. And depending on the side of the table that I'm on, I really like shares or I really like assets. And like you said, the buyers always want the assets, even if it's goodwill, because you get the benefit of the tax deduction related to that. For example, you know, you have a business that's making over $500,000 a year. The tax rate's 26.5%, and you get 26.5% of that million-dollar goodwill as a deduction over time. That's a significant amount of money. That's $265,000. So as a buyer, I want that. As a seller, you want to sell for a million dollars, get your lifetime capital gains exemption, not pay tax. Versus paying 25% capital gains tax. So you can see how, you know, there's a little bit of give and take. So a lot of times, you know, depending on where a valuation is, I'll either be very strong-armed to be like, hey, listen, if you want $1 million, we're going to say your business is worth $600,000. If my buyer agrees, it's going to be an asset sale. Like we're not losing that benefit and overpaying. But if we go in and we evaluate a business and we say, you know what, it's 3 times EBITDA, we feel like you're getting a really good steal. We can see the synergistic components of it. We don't want to rock the boat. The seller wants to sell the shares. We're happy to see that happen and we'll move forward with a share purchase. But the other part that you want to keep in mind as a buyer or seller, as a buyer, if I'm buying shares, There's inherent risk in that that I don't know exactly where, and I'll use the phrase, uh, bodies are buried. Uh, I've been watching— oh, I've been watching Ozarks a lot lately, David. It's fascinating. Um, but you know, the bodies that are buried are, you know, those transactions that took place 5 years ago that maybe didn't have the most perfect transaction, or, you know, maybe there's a tax liability or a loan that that we can't see and there's something there. There's maybe some security that's in place that we weren't aware of. So like everybody does the due diligence component to try and make sure we're mitigating any risk exposure, but buying the assets just means, hey, we're getting that goodwill. Any of the history, employee tenure, liability associated with any of that stays with the corporation. And we have a really low risk buy with a huge asset we can depreciate. So. You can understand from a buyer side why we would want to do it. But again, there's circumstances where if we feel like it's a good deal, it makes sense, we can overall mitigate the risk exposure, we can do all the due diligence, we feel good about it, we're going to play nice with the seller because we want this transaction to happen for more than just the value. There's likely synergistic approaches to this acquisition that makes sense. So There's lots of things to consider. What I would say is you want to make sure that you're working with people like you and I who truly understand how this works, because there's a lot of things that people wouldn't be aware of that we just need to cross the T's and dot the I's on.

Well, it's definitely very complicated. So, good advice is always, always important. Let's talk about valuation. So, in the exit planning world, we, we have something we call the value gap, which is the difference between what a business owner thinks their business is worth and what it's really worth. And that sometimes is a bit of a surprise to the business owner when we go through that process. Talk to us about, you know, what are some of the things that create that value gap and maybe what a business owner can start to do about that?

Yeah, and one element of our business that I didn't talk about is we do have a business valuation arm, which is handy. So, For a seller, right, who thinks that they're going to get $10 million and it's maybe $1 million, you know, it's nice to have a valuation in advance to understand how it could come together. You know, when we think of buying real estate, right, buying a new home, you typically always have your real estate agent provides you, you know, 5 similar transactions to give you some comparison, right? So just to give a little bit of perspective, but From my, from my end, there's 8 factors that truly drive business value. One is financial performance, right? In many industries, there's going to be some sort of discounted cash flow or EBITDA methodology, um, like an EBITDA multiple times 5 or 4. Um, it's the most common practice. Is it perfect? No, it's not, but it just seems to be the most, um, easily used and the most common, which ultimately means based on the performance, the financial performance of your business, you're getting 3, 4, 5, 6, 7, 8 times EBITDA. And, and that's a major driver of value. Now that's a foundation, but there's 7 other factors that, in my opinion, drive the value that either make it a riskier transaction or Or it makes it a more valuable transaction. So cash resources that are required in the business— do you have to constantly reinvest in new assets, or is it just a cash cow? Is it just delivering a major return on investment? The more cash resources, the lower the multiple is going to be because the higher the risk. The more cash that the business is generating, you know, the higher the multiple because it's just— Earning this rhythmic sort of amount of money.

Yeah.

Dependence on an owner. Dependence on an owner is a huge one. And I would say is probably going to be the largest devalue driver in a transaction. If the business doesn't operate without the owner, there's so much risk there for, for a purchaser. And what we want to do is we want to eliminate that. We want the company to be able to operate on its own. You've got vendor risk. You've got significant employee risk. Do you have key employees who are managing key relationships with customers? Do you have customers that are taking up a significant portion of the business where, you know, if you lose one customer, that could be devastating for the business? Are you in a growth industry, or is the, is the industry growing or is it shrinking? If it's growing and you have the ability to go out and attain more market share, That provides more value to a buyer. But if it's going the opposite way, you know, that's a higher risk for a buyer to try and find that safe space. So there's a lot of different facets that come into this and you have to look at them all, right? You have to look at all of them together because the more that you can stack up, if I'm a seller, the more I can stack pro related to all those factors, the better the position is going to be that I'm going to be saleable for one. And then I'm going to get a higher multiple on those earnings than what I would otherwise.

Yeah, and I think, I think that's important because really, at the end of the day, the multiple is going to be largely driven by, you know, what are the pro— what are your prospects for growth? And from a buyer's perspective, what's, what's my perception of risk of your company? And if I can't understand your company, or I don't understand your financials, or there's all sorts of other risk factors, Then that's going to be reflected. Either I walk away from the transaction or, or I say, I want to buy it, but it's going to be at a lower multiple.

And I think, you know, one thing that sellers don't really think of, you know, if this was your, your business and you built it up and, you know, it's $3 million of sales and you've got $300,000 of net income, that's going to be a different valuation than a $30 million business with $3 million of EBITDA. people are willing to pay more for that $3 million because it's larger, right?

Yeah.

I would have to buy 10 of the smaller business, put them all together just to compete with the larger business. So which one's riskier? So if you're someone who's looking at selling and you're getting your exit plan ready, there is an element of size of the business that does create a little bit more appetite for larger companies because When we look at this, I've got a similar diagram, David, that you're talking about with the gap. And we've got it as a pyramid that looks at the EBITDA level and says, what is the multiple that's a potential, but who's also the buyer group? If you can get a strategic buyer, they're probably going to pay more than many, but then you start getting a little bit bigger and then you've got private equity, venture capital, Where they're looking to maybe consolidate industries, they'll maybe pay a little bit more of a premium, but they deal differently too, right? So David would come into this transaction and say, this is great. I've got a strategic buyer, which is a competitor. I've got maybe an employee who's interested here, but I've got private equity. All of those are going to deal with you differently, and all of those are going to structure deals. Private equity is going to say, Hey, we want you to still have skin in the game. We want you to still operate. The employee might say, I want you out of here. Right? And so there's, there's just different ways that all of these deals come together and having the experience of someone like David to hold your hand and guide you through finding the right buyer for you is so important. Sometimes the number that you get, like it's important, but sometimes the, the ability to get out of the transaction. and de-risk yourself is going to be important too. So you have to really consider all factors.

Well, you raise a couple of great points. I mean, number one, you're right, based on size, it's not a linear relationship. It's kind of a little bit skewed where you start to get into like, I think, 1.5 of EBITDA or larger, you start to get more prospective buyers interested in your company. And the reality is that means that the multiple is going to go up. It's just supply and demand. So, you know, so that gives you a reason if you're sitting at, say, $1 million EBITDA, is it worth your while to grow to $2 million EBITDA? Yeah, maybe. It might be actually really worthwhile to spend a couple of years doing that because you're gonna get a much bigger multiple. And the other point is too, is that you always have to think about your exit options. So, it's not always about the money. The money is always gonna be important. But you're right, selling to a strategic is gonna be different than selling to private equity versus maybe selling to, you know, like what we call entrepreneurs through acquisition. You know, a single entrepreneur who's probably like a younger version of the existing owner who, you know, may or may not, you know, get along very well with the existing owner. But, you know, the existing owner may look at that person and say, oh, he's just like me. He's just 20 years younger or 10 years younger. So, Maybe they just kind of get along. And sometimes, private equity has, you know, I was gonna say a well-deserved bad name. But sometimes, they have a good, you know, so some of them are good. Some of them are, you know, not so good. And strategics, you know, there's probably the biggest paycheck, but probably the most strings attached according to in terms of the ramifications to your business.

For sure. And so again, finding the right buyer for you, you know, you might get a strategic, or actually, you know what, you might get an employee, a current employee who has no money, but it really could take the company and beyond you and probably would run it very similarly to you because you probably trained them. But because they've worked for you, they have no cash. You likely have a larger vendor takeback situation that's going to happen. A strategic, they might require you or private equity to roll in some of your equity into the larger entity and maybe even have an earnout formula, which just puts more risk on the transaction value. So it's important to understand how we do this in the best way. Truthfully, very rarely are you going to get a strategic buyer who comes in and writes you a check for a full amount of money. But I will say right now, As we're recording this, just last week, Grant Thornton, who's in my space, in the CPA space in the US, just bought a firm for $5 billion cash that had and raised that capital from private equity. No strings attached, cash deal offer. Massive things are happening. So private equity can be really exciting.

It is.

know, you position yourself in the right way and you're, you've planned it out and you're prepared for an exit, opportunities like that do come along. And, you know, if anyone's going to find you those opportunities, it's going to be someone like David. He's going to be able to find— he's— they've got Rolodexes, uh, to date myself a little bit, but they got, they've got email lists of tens of thousands of people, of prospective buyers who are just looking for that one opportunity. So, working with someone who can bring that much value to a transaction is so important.

And I think it's important during the planning stages to actually start thinking about what does a good ideal sale look like to you. And so, to think about understanding what some of the different ramifications are to selling to these different groups. And I'm trying to understand, you know, what it is that you're trying to achieve or what's important to you as an owner when you're selling, you know, because legacy could be really high up on your list of things. And that might mean, you know, maybe not selling to a strategic. But so you want to understand, I think, some of these aspects before you get knee-deep in the transactions, because I think, you know, a lot of these transactions sometimes unfortunately do blow up. And I think part of it's, you know, the mental stuff where people get very far into the transaction, they sort of realize that this is not a This is not a business partner that I want to sell to or work with in the future.

Absolutely. Yeah. And you know what, the longer that you can plan for this and the more you can surround yourself with the right team of advisors, this is going to be a very important conversation and a very important milestone, you know, for so many people. Even if you can take emotion out of this transaction, it's still extremely draining and difficult, but You know, if you do it the right way, it can pay off and support you and likely create multi-generational money for your family. So, yeah, you want to— if you're going to do it, plan in advance and make sure that you do it the right way.

Yeah. So, we're both financial people. We have biases towards businesses that have good financials. Why is, you know, if you're thinking about selling, why is having good historical financials important? But also, why is it also important to forward-looking financials, being able to analyze your company and project into the future?

Yeah, you know, I think a lot of sellers undervalue the importance of good financial information when they're getting ready to bring their business to the table. And the very first thing it does is it provides trust. You know, the very first thing is if a potential buyer looks and sees clean, up-to-date financial information, That's consistent. Uh, it doesn't have maybe any necessarily any non-deductible items that are put in there for tax purposes. You know, like there is an intention to clean some of that up, um, long before you get ready to sell, because if there's things that are muddled in there, it just, again, it loses confidence and it just provides more risk for a potential buyer.

Yeah.

They— buyers don't want risk. They're already taking enough risk with their own business or whatever their situation is with lending. They want they want that consistency. So that's in historical info. I got to tell you, sellers, if you're looking at selling, start getting review engagements done now. You know you want the review engagements done. It provides additional disclosures in financial statements. Yes, it's going to cost you a little bit more money, but it's it's based on GAAP. Generally accepted accounting principles, and which means that there's a framework that everyone understands and it's completed under the same rules. If you don't have that done, there's misconceptions. There's a higher level of risk of bias that goes into that financial info. So make sure that you're upping the quality of your financial reporting. And then lastly, you know, building out the projections, what does the future look like? As the business is operating, because as a business owner, it's going to operate without you. So when you're, you're gone, what does that continue to look like? Who's in charge of what? What's your org structure look like? You know, what sort of disclosures can you give on contracts and, you know, creating the vault of information that you can essentially, once you have signed a nondisclosure confidentiality agreement, You've got everything there to say, here it is. This is, this is the map and the success of the business. Here's the historical, here's the future. This is how it all works. You know, the more clear the picture, again, the more confidence you're going to have in a potential buyer so that they can come in, review things fairly quickly, and, and just know exactly what they're buying and eliminate some of the risk of misunderstanding or things not being the way that they would expect them to be.

Yeah, and I think you raise a great point about really de-risking the business. One of the biggest ways for me is, you know, if you can— if you've done multiple years of doing projections and you can show that you're actually pretty good at it, that's, you know, from a buyer's perspective, that gives me a lot of confidence that I understand what it is that I'm buying. So, I think that's important. And I think We've seen the advent here in Canada of fractional CFOs, and I know your firm provides that service. And it's really something that's grown a lot. It was kind of big in the US. And I think over the last 10 years, fractional CFO services have really become a little bit more mainstream where people understand and recognize that they actually exist. So, I think that's really something good if you're kind of within you know, 5 years of a potential exit, I think something like fractional CFO services are something that, you know, business owners should really look at because I think it's actually a worthwhile investment.

And even so, on top of the CFO, which I agree, right, not only are they going to help you understand the difference between profit and cash flow, which is a big misconception, they can predict both. But like I would say, the other thing, David, that we've been talking about together is the quality of earnings report.

Yeah.

Which is important because it gives the, the, the new buyer's lender or funder the confidence in what's in the numbers, right? It gives you more of a narrative. Like the review engagement financials are good because they essentially say these are the numbers and they're true based on the rules and the guidelines that exist in the accounting world. The quality of earnings takes it to the next level and it says, okay, these are the numbers. This is why they're the numbers. This is why you know, the risk is high or low. This is what the future of these numbers looks like. And it just gives in-depth analysis. So, you know, the higher the value of your EBITDA, the higher the value of your business when you go to exit, the more likely you're going to have sophisticated lenders that are involved.

Yeah.

And, you know, if you've got a $5 million EBITDA company, the likelihood of it having some sort of investment banking component to it, or, you know, high-value commercial lender involved in there is going to be pretty high, which they're, they're doing lending based on risk assessment. They want these types of reports. So, you know, the more that you can get proactive in having these things ready, the better you're going to be positioned to successfully exit. Excellent.

One final question, Bob. Your firm is an integrated firm. You provide Accounting, tax, valuation, fractional CFO services. Also, there's a legal aspect in Ontario. You know, why is that important if you're a business owner who's looking for a good advisor? Maybe they both want to— maybe from a cost perspective, it makes sense, but also just, I think more importantly, avoiding making mistakes. So why is that integrated approach so important?

It's important because we have the experience in doing transactions. So just like you, David, you know, real estate agents sometimes feel like, oh, well, we'll list your business. Right. And, you know, for any business owner who's going out there, do not approach selling your business that way. Right. Work with someone who's experienced in doing those types of deals for a couple of reasons. One, a real estate agent has access to real estate buyers. Okay? They don't have a Rolodex. I'll throw that back in there again. They don't have a Rolodex of potential business buyers. They have real estate buyers. So you want to work with the person who has the business buyers, the potential business buyers. It's the same when you choose your professionals. You don't want to necessarily have the person who does your personal taxes and maybe your business taxes, although they could be great. You want people who are experts in doing deals. And we have certainly the succession planning and the helping support sellers get ready and structured appropriately. That's a different level of expertise where you can do complex, sophisticated tax work. But we also have the buyer side, the due diligence of a potential acquisition, understanding what that would look like. Not only do we do dozens of these deals a year for our clients. We also do these deals for ourselves. So we're very active in this space as well. So we understand what it feels like as an entrepreneur to invest in this type of growth. We understand the risk analysis. We understand what it is that you want to see as a buyer, right? So we've played this part and it's so important for you to work with your advisors who are experienced in doing this because it's not like selling a house. It's not like selling a house. Similar principles, right? Like the idea of, of the MLS where you list your house is that you get access to the most amount of people, but in the very similar process when you deal with a business broker, same with when you're working with experts, you want them to bring the vast expertise of how you structure your business for the ultimate success. And that's what we do, David. And we're, we're very proud of it. And it's certainly an area that we're going to continue to expand on, which is why we're formalizing some of our buy-side and sell-side offers for M&A transactions within our company. So excited about bringing that to the table and continuing to evolve that and working with great partners like yourself to truly bring that to the market.

Well, I think there's a lot of exciting growth ahead for you, so I'm looking forward to it. Bob, thanks so much for joining, joining us today. It's been a great pleasure chatting with you. And everyone else out there, thank you for joining us. We hope you enjoyed today's episode. We'll catch you on the next one. If you want information on how to contact Bob, we'll be in the show notes below. Thanks very much. We'll see you next time.

That concludes this episode of the Expert Series from Selling Your Canadian Business. This conversation is for educational purposes only and is not professional advice. Always consult qualified professionals. Click on any of the additional resources on screen or visit sellingyourcanadianbusiness.ca. Thank you for joining us.