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Valitas Capital Partners

Guiding Business Owners in Transition 

By Cheryl Long

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Though the company is new, the breadth of experience behind Valitas Capital Partners spans decades. Co-founded by Paris Aden and Marco Goguen, the Toronto-based corporate finance advisory firm is taking a novel approach to private market mergers and acquisitions through a fresh platform based on its partners’ wealth of financial know-how.

At the heart of Valitas is the company’s ability to attract that particular investor who sees more value in a business than anyone else. That’s how they ensure their clients receive the best value for their companies, and how they’ve built a track record that includes more than 200 M&A transactions and financings worth over $125 billion. Their experience is reflected in their global reach with international buyers making up more than 50 percent of sales.

“I can’t think of another independent firm focused on the private market that can parallel that experience,” Aden said. Some firms operate as “checklist jockeys”, running down the list and checking off the steps needed to close a sale. But what they’re lacking is the expertise, skill and access to prospective buyers needed to create competitive tension, Aden explained, which is key to maximizing value. Controlling the competitive process between multiple prospective buyers creates urgency without risking the sale, unlike transactions involving a single bidder that can lead to a long, slow process and the threat of reduced valuation.

Valitas incorporated in January, bringing together the two industry veterans who have worked on and off together since meeting 20 years ago. “Marco and I had talked about getting together to do something more entrepreneurial for a number of years,” Aden said. “We both recognized the need for someone to create an effective bridge between mid-market and global capital markets. We didn’t see that need currently being met.”

Vast experience in range of sectors

Goguen’s industry experience lies in “new economy”, including technology, banking, media and industrial sectors. Prior to launching Valitas, he ran a private equity firm and has experience serving on boards of directors for more than 20 public and private companies. Today, he works out of Valitas’ Montreal office. Aden’s work has focused on more traditional industries, including natural resources and international business. He shares his knowledge with the industry’s future leaders as a lecturer with the Master of Finance program at Queen’s School of Business and as an M&A subject matter expert for Moody’s Analytics’ Advanced Capital Markets program.

Smaller private market transactions make up the bulk of Valitas’ success stories. Whether it’s corporate sales, acquisitions or financing, the company prides itself on the support provided to business owners in transition. They’re also selective in the clients they take on, ensuring that each one receives the time and energy required to put the odds in favour of a successful outcome.

“We’re getting a lot of interest and we’re encouraging that interest, but at the same time we just want to make sure that our clients we spend a lot of time on right now are properly motivated and willing to go down the path with us,” Goguen said.

Much of the service Valitas provides is based on education, teaching prospective and current clients how the M&A process works and how to prepare their business to derive the greatest value, ensuring that all parties are aligned in their expectations and objectives. Many of the clients they work for are coming from a combination of niche manufacturers and financial technology companies. Reasons for selling often revolve around retirement, succession or a shareholder issue, and it can be an emotionally charged situation for everyone involved.

Second generation less likely to take over family business

“There’s a lot of businesses where the entrepreneur is just reaching that age and the kids are not really involved in business and don’t’ want to run it. Demographically in Canada, that’s really important and that’s a huge driver for business sales in Canada,” Goguen said.

“There’s a growing professional class and it’s so much less appealing to second generation business owners to go work in their parents’ business because, generally speaking, they want to go into the professional classes,” Aden added. “They’re finding in terms of career appeal it’s increasingly difficult.”

Selling a business after a lifetime of investment is rarely an easy decision, but that’s an area where Valitas specializes. It often makes more sense to cash in the family business — which often doubles as the owner’s retirement fund and family inheritance — than transitioning to the next generation and introducing a new element of risk. It’s also crucial for business owners to consider succession planning before they’re thinking of selling, Aden explained. The sudden illness or death of a business founder can be catastrophic and happens more often than you would think, he added.

“There are a lot of jobs are at stake here in these owner-managed businesses,” Aden said. “If that transition isn’t properly managed, we could see a hollowing out of these mid-sized, privately managed businesses. It’s very important for them to be proactive about that.”

It takes a team to sell a business

Business owners that turn to Valitas invariably have trusted advisors behind their name, in many cases an accountant and lawyer. Rather than shoulder the entire process, Aden said they are happy to work alongside the company’s network of professionals, taking a team-based, collaborative approach to the transaction. If outside help is needed, Valitas has its own group of advisors experienced in everything from government relations and branding to tax law and logistics.

Though Valitas is a new name in the corporate finance advisory world, thoughts are already turning to expansion. Building industry expertise is important, Aden said, and they’re proactively looking for additional experts who will add value and insight to their offerings.

Joining forces with other advisory groups and building a presence in some of Canada’s major cities such as Vancouver and Calgary are also part of the forecast.

Learn more about Valitas Capital Partners by visiting www.valitascapital.com.