Eric Dufour
Vice-President, Partner | FCPA | Management consulting

Updated on February 5, 2024

How can you maximize the value of your business to make it more attractive for future partners or buyers?

According to recent data from the Centre de transfert d’entreprise du Québec (CTEQ), more than 34,000 businesses in all sectors will be up for sale by 2025, and 6 out of 10 SME owners will not be prepared to transfer their business.

Business valuation is a corporate value optimization practice that usually takes five to ten years to complete all stages of the process. It is therefore a good idea to initiate the process as soon as the entrepreneur starts considering a sale or a transfer that will occur in the next few years.

What are the different valuation methods?

Since the pandemic, markets have fluctuated. Depending on the sector, profits have risen or fallen, with rapid changes that are difficult to predict. Presently, even if the economy stabilizes somewhat, the evaluator will have to take into account a company’s strategic plan, the actions it plans on taking to adapt to its market and the skills of its teams to do so.

Generally speaking, the more profits a company generates, the higher its market value. This market value is determined by EBITDA (earnings before interest, tax, depreciation and amortization), a theoretical measure that helps determine a company’s financial health. This value is then multiplied by a factor, which usually varies between 3 and 5, to give a theoretical value for a company.

To calculate the fair value of a business, we base our calculations on the value of the assets, the profitability or the market.

The valuation approach and method to be used will be determined by your type of business and the information obtained during the analysis.

For more information, consult our article on valuation reports and methods.

How can you enhance the value of your business?

1. Carry out a diagnosis of the business

First, you have to fix objectives and the time at your disposal. Then you need to produce a diagnosis of your business.

  • What are its internal strengths and weaknesses in terms of finance, management practices, operations and human resources?
  • What are its external strengths and weaknesses, particularly in relation to its market positioning?
  • Is the business growing, stagnant or in decline?

Thirdly, you should establish a list of actions to make up for the company’s deficiencies and assess the relevance of each.

Let’s take the example of a company that has to make up for a technological lag regarding its equipment. Will the purchase of new technologies increase the company’s value sufficiently so that the invested cost is worth the trouble? The time required to perform each action is also evaluated.

You could benefit to be supported by experts from outside your company during this process.

2. Conduct a profitability analysis

It is a common misconception that, based on Pareto’s Principle, 20% of clients generate 80% of profits and that, conversely, 80% of clients generate 20% of profits. In fact, our studies show that, in the manufacturing sector, 40% of clients generate 320% of profits, 34% of clients generate 0% of profits and 26% of clients generate 220% of losses.

When you conduct a profitability analysis, it must be precise. You need to assess your cost per product or service, using data from the last year, in order to assess your profits on the basis of product per client. The purpose of such an exercise is not necessarily to eliminate unprofitable clients or products, but to shift them where possible.

3. Develop a concrete action plan

The entrepreneur and the experts then choose the actions to be performed and produce a concrete action plan, including the people responsible and the deadlines.

You may decide to invest in projects to remain competitive in your market (e.g., to optimize your processes or digitize your operations).

Here are some examples of possible actions

  • install an accounting system to manage inventory;
  • look for new distributors to increase sales;
  • improve the organizational structure by giving more responsibilities to certain employees;
  • documenting the processes and instituting policies and procedures in order to leave traces of the seller shareholder’s knowledge.

One thing is for sure: you’ll be able to make informed business decisions that will increase your profitability and the value of your organization (whether this means focusing on one product rather than another, or negotiating with certain customers and suppliers).

In addition to increasing the company’s market value, the optimization process reduces the risks related to the contractor’s rushed departure, due to health problems, for example, and the risks related to “latent defects”, because there won’t be any more.

It is also very reassuring for the seller to know that he is handing over a healthy business that has every chance of survival (whether to his children, employees or a third party).

While the optimization process may sometimes seem long, it is worth it. Often the transaction will happen faster because of the process. A healthy business attracts more potential buyers and the buyers’ requests for financing are accepted more easily.

Business owners who will have done their homework properly will have a better chance of selling their business for more than the valuation price or obtaining the financing they need.

The company’s valuation is therefore a genuine “beauty check” carried out for the greatest benefit of the seller or transferor… and of the buyer.

29 May 2023  |  Written by :

Éric Dufour is a management consulting expert at Raymond Chabot Grant Thornton.

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Justin Maheu
Senior Advisor | Adm.A., C.M.C. | Management consulting

For cities, cultural life is a powerful driver of development. Here are the winning elements of an infrastructure overhaul.

Culture is an essential part of every community and a powerful engine for community development. It is simultaneously a vector of social transformation, economic growth, territorial development and improvement of citizens’ quality of life.

Culture increases the feeling of belonging to a community and acts as an attraction factor for a territory. For all these reasons, ensuring the cultural vitality of our municipalities is essential.

To achieve this, it is important to have cultural infrastructures that are continually evolving. Building public libraries, performance halls and exhibition centres means providing meeting places for artists, cultural organizations, citizens and visitors. But it also means enhancing our heritage treasures and giving our cities a strong identity.

In a context of obsolete municipal buildings, increased interregional migration and widening demographic gaps, many cities must rethink their cultural infrastructures.

Four issues worth highlighting

When developing cultural infrastructure projects, consider four main issues.

Culture

To assess the necessity of a cultural infrastructure project, you must first understand the local context it will evolve in and conduct a diagnosis to identify the community’s real needs.

You can do this through cultural mapping and public consultations. It is important to ensure that the project you want to develop reflects a common vision and complements the existing cultural offering.

This is all the more necessary since, in some cases, you need to consider taking the lead to design an innovative project from scratch.

Territory

To successfully integrate into its environment, a cultural infrastructure must be coherent and relevant to the territory where it is to be built.

A project’s coherence requires an architecture that respects and enhances the natural environment, heritage context and urban planning. Its relevance is defined by its integration into the social and urban fabric.

Economics

A cultural infrastructure project must be grounded in the economic context. In a precarious economic situation, it is often difficult to move forward: construction costs soar, funding becomes difficult to secure and public opinion is often critical.

At the same time, cultural infrastructure can have the power to function as an engine for economic revitalisation and constitute an opportunity rather than a constraint.

Quality of life

The success of a cultural project depends on a community’s engagement. The social acceptability of a project is usually achieved when you have considered the three previous issues. However, social acceptability increases when you take time to consult a wide range of actors and sectors in addition to the cultural sector.

Ultimately, a project’s benefits will speak to its viability. Visiting a cultural facility is a way for people to exercise their cultural citizenship, broaden their minds, improve their quality of life and increase their sense of belonging to their municipality.

Four conditions for success

Based on our experience with many different approaches and by analyzing the successes and failures of other projects, we have identified four elements that contribute to success.

An innovative project

A cultural infrastructure project must of course meet a need and create value. But above all, it must be inspiring and express a desire for novelty. Its innovative nature must inspire a community to dream. People are only too keen to support an ambitious vision!

A multi-issue solution

Cultural infrastructure projects are typically led by cultural professionals who have a well-defined objective. But to convince a community, stakeholders and elected officials, these projects must simultaneously address several needs, including social, urban or economic revitalisation issues. While this broadened approach will certainly be more complex, it will also be highly beneficial.

Strong leadership

Successful major projects are led by unifying, credible and persevering promoters. Project governance requires rigorous process management by seasoned professionals. Yet, the vision and determination of an inspirational leader is what will drive a project to succeed and rally all parties.

A project that strengthens a territory’s identity

A successful cultural infrastructure contributes to a territory’s vitality while enhancing its specific features and respecting its core values. A cultural infrastructure contributes to citizens’ sense of belonging and acts as an attractiveness factor by creating friendly and innovative living environments.

Pay attention to governance

To the above issues and conditions for success, we must add project governance. Good governance cannot save a bad project, but bad governance can kill a good project! From the outset, you must pay particular attention to defining the appropriate decision-making bodies and management mechanisms.

17 May 2023  |  Written by :

Justin Maheu is a management consulting expert at Raymond Chabot Grant Thornton.

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The Grant Thornton International IFRS team has published the 2023 version of its IFRS Example Interim Condensed Consolidated Financial Statements 2023.

The IFRS Example Interim Condensed Consolidated Financial Statements 2023 have been reviewed and updated to reflect changes in IAS 34 Interim Financial Reporting and in other IFRS that are effective for the year ending December 31, 2023 and that have been issued prior to April 30, 2023.

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Jean-François Boudreault
Vice President and General Manager - AURAY Leadership | Human resources consulting
Updated on February 23, 2024

There is nothing worse than employees who let their work frustrations fester without talking about it with their managers. “Resenteeism” can be damaging.

Resenteeism is a new term describing employees who show resentment towards their employer but don’t dare talk about it openly—except with their colleagues. This phenomenon can become contagious and quickly undermine the work climate. That’s why employers must be mindful about resenteeism and find ways to identify and address it before it’s too late.

Presenteeism and resenteeism, how to distinguish them?

Presenteeism leads to a loss of productivity because employees show up to work physically but not mentally. Resenteeism however can cause employees to check out more permanently if an employer fails to spot it. That’s because resentful employees can remain productive for some time even while continually blaming their employer and sharing their bad moods with colleagues.

In a labour shortage context, it’s especially important to understand what may be displeasing employees and try to redress the situation to leverage their skills in the best possible conditions. As well, maintaining a healthy and pleasant work climate is essential for retaining the finest talent in your business.

How do you recognize that something’s amiss?

With the rise of telework and remote management, resenteeism can be even more difficult to identify as it is not always visually perceptible. The key is communication. It’s important to encourage manager-employee exchanges in groups and individually:

  • Listen, take an interest in what employees experience on a daily basis;
  • Stay open and take time to receive suggestions and comments from everyone;
  • Set aside time during the week to speak with employees, one-on-one and in groups, and give them a space to talk about their life and work issues.

You probably know the saying “an ounce of prevention is worth a pound of cure.” The time you take to listen and discuss with your teams is an investment that will save you significant costs in the medium and long run.

This aspect of the employer-manager-employee relationship should even be covered under your occupational health and safety strategy. Just as you maintain your business’s equipment and tools, it is essential that you look after your employees’ physical and mental health.

What are the solutions to help solve the problem?

Once you identify a resenteeism problem in your team, you must determine its root causes and then propose solutions best suited to the context and needs. If the dissatisfaction expressed by employees is directly tied to their professional life, you can be flexible in improving the situation, just as you are with presenteeism. For example, you could:

  • change certain tasks while factoring in the impact this will have on the team’s productivity or work climate;
  • get employees to commit to correcting the situation by guiding them towards available resources;
  • follow up with employees, encourage them and formally recognize their progress;
  • provide employees with opportunities for job development by encouraging them to update and develop their skills.

If the cause of resenteeism stems from an employee’s personal life, you can consider alternative solutions, such as more flexible working conditions for a better work-life balance, or prescribed preventive leave to avert a longer absence.

What are the benefits of considering resentment?

Prolonged or pervasive, resenteeism adds to a toxic work climate. In the medium and long run, it will undermine your employees’ retention and productivity.

Recognizing employee resenteeism will help you circumscribe it and find solutions faster to eradicate it. This way, you will contribute to:

  • employee cohesion and collaboration;
  • better intra-team productivity;
  • a higher rate of employee retention and commitment.

Don’t remain passive before this phenomenon, which tends to spread. As a manager and employer, getting ahead of the problem will allow you to have an easier time correcting any resenteeism and thereby avoid major collateral damage.

24 Apr 2023  |  Written by :

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