BCBusiness

42 BCBusiness sePTeMbeR 2015 Lindner had built a career in manage- ment for nonprofit organizations such as St. Paul's Hospital Foundation and the Alzheimer's Society of BC. But when she had her second child, Lindner realized there were few opportunities in her field that gave her the flexibility to spend more time with her young family. She had been a customer of a knitting supplies shop called Baaad Anna's Yarn Store for sev- eral years and watched as the business grew into a vibrant hub for the knitting community. When the owner, Anna Hunter, chose to move with her family to Manitoba, Lindner saw buying the busi- ness as an opportunity to take more con- trol over her schedule. After nine months of research and negotiation, Lindner took over the keys this spring. "I have a manager, and she has quite a good, extensive retail background," says the 38-year-old former Czech radio jour- nalist inside her East Hastings storefront as a customer settles into an armchair to knit. "We work very well together. She helps maintain the bread-and- butter of the store." Lindner spends two days a week in the store to stay in touch with staff and customers but otherwise oversees things from home, where she can now spend more time with her two young children. As the size of companies involved in a sale grow, the deals become more and more complex—and the expertise required to broker those deals increases. David Lam is the Vancouver-based Mid- Market Corporate Finance Leader at Deloitte Canada. His firm acts as an invest- ment banker, discreetly marketing private companies to buyers and investors around the world. "In today's marketplace, capi- tal knows no boundaries," he says. "There is no geography. It comes from all over." In June, Lam worked out a deal for Charles Chang and his Burnaby-based natural health company Vega, which was bought by Denver-based WhiteWave Food Com- pany for US$550 million. Private equity firms and strategic cor- porate buyers are usually the ones with the capital to buy B.C. companies that are no longer just mom-and-pops. But deals do get done closer to home among local families, as was the case when Richmond- based Nature's Path Foods bought Van- couver-based Mexican food maker Que Pasa Foods in 2012 for an undisclosed amount. "We'd been eating those won- derful chips for years as a family, and they were always our favourite chip," recounts Nature's Path founder and president Arran Stephens. When the brothers that owned Que Pasa made plans to retire, they asked Stephens if he was interested in buying the company. "I talked it over with my family, and my son said, 'Yeah, that's a great product, great brand!' And so we jumped on it right away." Sometimes, finding the highest bidder is not the top priority for sellers. "They could have sold it to a multinational con- glomerate," says Stephens about Que Pasa, "but they approached us because they thought we would be the better stewards for the business and the brand." Regardless of the type of small busi- ness, Bacinello says the main things prospective buyers should look for are opportunities for growth and sufficient cash flow. "If it's a business in a mature industry without any opportunity for growth, then what you're buying is a busi- ness that's dying," he says. The compa- ny's cash flow should be sufficient to pay the owner fair compensation for time put into the business, support debt servicing (if the owner borrowed to buy the busi- ness) and provide a reasonable return on the buyer's investment. "Because other- wise, why are you doing it?" And yet, Bacinello says buyers should seek out businesses with a few imper- fections. "The deficiencies of a business quite often are the opportunities for the buyer," he explains. "If the business is perfect, there's nothing for the buyer to do to add value." In the case of Nature's Path's acquisition of Que Pasa, the com- pany made wonderful products, says Stephens, but its chip factory was archaic. "We closed the old plant down, opened a brand new plant in Delta with brand new equipment, and we've almost doubled the volume of chips." As for Michelle Tao, she's gradu- ally making Thompson's old practice her own. "Have I put my stamp on it? Yeah," she says. She changed minor details like paint and the placement of garbage cans, but more important, she spent tens of thousands of dollars buy- ing equipment like a panoramic X-ray machine and intraoral cameras to take pictures of patients' teeth. She can care for her patients more intimately with bet- ter diagnostics instead of referring them outside her office. "Despite the hard work, if you feel strongly about it, there's nothing like having your own business," she says. "I feel like I'm working towards something great." • the issue small Business

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