Welcome to The Entrepreneuring Show, where we strive to provide insights and stories for entrepreneurs, by entrepreneurs, where innovation meets inspiration led by veteran entrepreneur and tech founder. Here’s your host, Jill Button. And in this episode, we’re talking about how to buy and sell businesses successfully. You’ll learn how mergers and acquisitions are used in business deal structures for purchasing a business, those that benefit buyers and those that benefit sellers, who needs to be involved in the deal and how to be successful when selling or exiting your business.
Jill: My guest today is Nasira El Hadri, the foundry of Hadri Law, a boutique firm specializing in M& A transactions. Corporate commercial employment and international business law. With a global legal background, Nasira holds an LLB from Spain, a Master’s in International Business Law from France, and an LLM in Canadian Common Law from Osgoode Hall. Called to the Ontario Bar in 2021, Nasira previously worked as a Corporate and Commercial Associate Advising on M& A, Financing and contract negotiations.
She’s fluent in English, French, Spanish, and Catalan offering. She offers legal advice across multiple jurisdictions. Wow. Drawing from her experience as an internationally trained lawyer, Nasira also mentors others navigating the NCA process, Canadian legal studies, bar exams, and career development.
Welcome to the show Nasira.
Nasira: Hi, Jill. Thank you so much for having me today. I’m very excited to share my experience today.
Jill: I am so excited to have you on the show. You’ve been a member of the ProcureHub community for a while now, and we’ve not yet had a chance to get to know each other and you have such a fascinating background and I can’t wait to hear all about your journey. Your background and let’s start with your entrepreneurial journey. Tell me what led you to become an entrepreneur.
Nasira: I think more of a choice. I think it was like a destiny for me. I grew up with my dad being an entrepreneur. my uncles being entrepreneurs, they all have their own business. So I grew up with that mentality that at the end, you have to learn, you have to get your education. But at the end, you have to build something for yourself. And I’ve seen how, how much of a struggle it is. But at the same time, how, rewarding it is to build something for you, for your family, something that you can be proud of. And especially when you have a vision and you want to make it true and you have the tools. And I think for us, it was not a choice. Especially for my parents, just because we were immigrants in Spain. And so when you can not get the jobs because you don’t have the education, then the best thing you can do is create jobs for yourself. And that’s exactly what they did. And many other people I talked to here in Canada, because also we have a good amount of, immigration, population and they all come different, like from Spain, my parents were not educated, but here a lot of people become educated and they could still not find a job.
And the same thing happens last week. I was, speaking with, with, an artist, nobody could hire her. So she decided to start her business and the business was doing so well that, A college offered her a partnership and now like she’s booming. So she told me I could not get a job. So I created for myself, for me, it was more of a vision as well.
I could get the job, but it was not enough. I want to implement something. I have my own ideas. I want to improve the legal profession. And I think the best way I can do it is by, having this law firm and investing everything in it. That’s amazing. That’s a very common, Response. When I asked the question about, how did you become an entrepreneur?
I’ve had the, the great benefit of talking to a number of entrepreneurs and so many talk about wanting to control their own destiny and to control their own future.
Jill: There’s actually a famous quote. I think I’ve mentioned it on the show a few times, by Jack Welch. He’s a famous CEO from GE. I used to work at GE back in the days and it always stuck with me.
Control your destiny or somebody else will. So that’s what it reminds me of. And I think that’s the spirit of being an entrepreneur.
Nasira: Absolutely. And I think the moment I decided to start my own firm is when I, learned because I knew it, but one day I had a conversation with another lawyer and, It was like, you have made the choices that led you here today.
So being in a law firm, taking the word that comes through the door, as opposed to you choosing which files you want to do because you have made the choice. and that was so empowering because I was like, wow. The same way I chose this, I can choose something else. And that something else for me was to create a different path, create a different environment. The legal profession itself, the business structure is in the currency. Like it’s not looking very good for the future generations because there is a disconnect between what the new generations want and what is expected from you. in the business of law. And I think people like me, I’m not the only one.
There are so many other lawyers that we are trying to make this a better place to, to work and to help also lawyers not to leave the profession. Because when you leave, when you finish law school, you have this idea that, you’re done and now you’re going to be working. But going through articling, going through the junior process, it’s tough. And it can make you doubt yourself. Imposter syndrome is the real thing and it can hit you hard. And it’s so heartbreaking for me to see so many good professionals, people really motivated that they started the practice of law, leaving the practice of law because they could not find a workplace that represents them, that supports them to be better lawyers.
Jill: What’s, what has been the most challenging thing for you in, since you started your own practice, or even before, like what’s been the most challenging thing for you to overcome? You’ve been through a lot. You obviously have a tremendous amount of experience. Is there any one thing that stands out for you that has, that was particularly challenging?
Nasira: Yes. Like coming to a country. Knowing no one, you have zero connections, especially like professional connections. And then starting from scratch by working in, I worked in retail, I earned minimum wage. Then I went up and I worked in finance for five years. Then I was finally able to do my master’s and I got rejected the first time I got rejected by another university.
Finally got in it, finally went through it, finished it. Do the whole process of going through article in with people who are much younger than you. You’re much older in age. You’re in a different stage of your life. that was challenging. But I think the most challenging is to start a business with those.
In those circumstances, business is all about branding. You could be the best lawyer in the world. You can have the best product in the world. But if people don’t know you, it means nothing. And especially for us, you have to have a, people need to trust you. And you only can build trust when people know you, enough.
Not only like you are a good, Like you’re good at what you do. It’s okay, can I trust you as a person? And, that is something you need to earn, through time. Like you need a lot of time, you need a lot of connections. And I think me starting a business from scratch, like everybody else, we all start from scratch, but me started in a country where I didn’t have the connections to, succeed.
It has been challenging, but at the same time. I am for the challenge. Like I came here knowing all of that, that this could happen. And that’s what keeps me alive.
Jill: I think you must have. And I think it’s a common trait for a lot of entrepreneurs, having that grit, that determination, getting knocked down, getting back up. Tell me a little bit about that. and some of the things that, you’ve. examples that you’ve had to overcome, like what has been one of the bigger obstacles that you just didn’t let get in your way? Was it, starting your own business, networking? Tell me about that.
Nasira: It’s a package, right? Like it’s starting the business. it’s a professional business. It’s regulated and you are dealing with, like you have a lot of responsibilities. What you do and obviously like rightfully so we are responsible. and at the same time, like nobody knowing you, like you don’t have the marketing tools, like, how do you, so you are a lawyer and at the same time, now you are a business owner, they’re contradictory because you as a lawyer, you are all about minimizing risk.
You see a risk and you want to get rid of it as a business owner. You should be comfortable with the risk. You should take risk because that’s the only way you can advance. so there is this, like this fight. So me going into business, being a lawyer, I had to learn a lot about how to do business.
As a business owner, more than being, because lawyer, I know how to do it, but now how do you manage a business and the marketing of it? As I said, like, how do you, make people know your, product that you, what can you help them with? Like you have to be available to them. And those are like all the marketing tools that I’ve been trying to learn, little by little.
Jill: And I would say that, that is as well for entrepreneurs, it’s really challenging. We mostly come into wanting to create our own business, start our own business, become an entrepreneur, not realizing that the domain knowledge that we have alone isn’t enough, that you really need to figure out things that you.
Don’t want to have no idea how to do some things are counterintuitive. Like for you risk for me, it’s sales, I’m in purchasing. I’m a supply chain and procurement expert. Sales is not my thing. So for you, as a lawyer wanting to mitigate risk, it must have been really tough for you to suddenly go, I need to accept risk and I need to be comfortable with risk.
Nasira: And being a salesperson, like that is something you don’t learn in law school. So my job is yes, to do the legal work, but it’s to close deals. Like I ha I have a lead, like what, now that I’m in, it’s my own firm. I understand that process very well before you treat everybody as a client, but when you’re a business owner, you what’s a lead, the difference between a lead and between a client, And, You have to, you have the responsibility of making the sale at the lead, stage. And I think that’s something you don’t like. We didn’t learn lawyers. We don’t have that knowledge. So I’ve been trying as well to learn that and to have my own, sales strategy. I don’t want to, like we all say, we don’t want to sound salesy or any of that.
But yeah, it’s, a process of learning business. Yeah. Sales and marketing.
Jill: Yes. And being a member of the ProcureHub community, we, are excited to have you as part of our community and bringing the knowledge and experience of those entrepreneurs to help others like yourself, whether it’s, learning about things like sales, SEO, marketing, social media, you yourself can bring to the community, knowledge and insights around. How to buy and sell businesses successfully. So I love, that you’re part of the community and I’m excited to, to see you grow within the community. I want to delve a little bit deeper into this four languages. You practice law in four languages. Help me wrap my head around this. This sounds crazy to me.
Nasira: Yeah. So I, speak fluent in different languages, not because I learned them, not because of education wise, like I sat and I had a tutor. It’s because I lived in different countries. So I grew up in Spain. So naturally speaking Spanish. And I also on the area of Catalonia, where Barcelona is. Everybody knows Barcelona, right?
So that area, we have a different language. it’s like we compare it to Quebec. We have our own language and our own culture. So that is Catalan. So in universities in Spain, so it’s what I had my law degree. you study in Spanish and Catalan. It’s the choice of the professor to choose either language.
So you have to be comfortable doing both of them. So those are the two. And then I went to France and I did the master’s in international business. So that was fully French and it was funny and very stressful because you lost, you would lose points if you made any grammatical mistakes. And that, and it’s really easy to make grammatical mistakes in French.
It’s such a complicated language. so that’s the French. And I learned that because my grandparents lived in France since the seventies. So I’d been going there and I learned the French on the streets with my cousins, with my friends. and then obviously English. I learned English in school, but I was able to say, yes, I can speak it.
And I can provide legal advice in English when I came to Canada. And then I did my master’s at Osgoode and I went through the whole process. So it’s more of. Experience, places.
Jill: And so explain to me how you are able to offer legal advice in all of those different languages and jurisdictions for those who don’t understand the law and where you need to be licensed. Can you help us understand what that value and benefit is that you now have being able to offer legal advice and all those jurisdictions and in those languages, that’s just incredibly impressive, by the way.
Nasira: Yeah. the thing is, we have to make the distinction between common law and civil law because we are different. So in Canada, we do common law in, in Europe. We do civil law and in civil law jurisdictions. When you have a law degree, you become a legal advisor. So we don’t have to be called to the bar. You only go to the bar. If you want to go to court, if you’re going to be representing clients in court, in my case, because I knew I was going to come to Canada, I looked into whether I wanted to go and be called to the bar in Spain, or I wanted to do a master’s, which could help me, more.
So I looked into it and it make no difference who To be called to the bar in a, civil law jurisdiction. So I decided, no, I’m not going to do that. I’m just going to go and obtain a master’s because everybody said, if you have a master’s in French, you go into Canada, everybody speaks French that will help you. Surprise, that’s not true. So, that’s why I, like in Spain and France, I’m a legal advisor, because I studied law in those countries, and obviously in Canada. But as of today, I do international business and I help, businesses go to different countries, but I’m not the one giving, the legal advice on those jurisdictions because that is a business choice that I make, that I, focus on giving advice on Canadian laws because it’s already tough enough to be, to stay up to date with the legal implications in one jurisdiction that I partner with my other friends, lawyers in different countries. So we work on partnerships to take our clients to the different markets.
Jill: Incredible. So that’s a great segue into Hadri Law. Tell me a little bit about the services that you do provide at Hadri Law and, how people can actually, leverage your services, in, cause our audience is entrepreneurs and small and medium sized businesses. And what are the services that they can, they can work with you with?
Nasira: We can help different, business structures from, sole proprietors, to, new businesses to establish businesses. We help individuals incorporate their business. We help them create their minute book, keep it up to date, do all their corporate maintenance also do, the shareholders agreements. Then, they’re drafting negotiating their, commercial agreements. So anything that they need to, for sales, for example, distribution agreements, NDAs. Anything that they need to operate. We are there for them. And then, employment. We don’t do employment from an employer’s an employee side. We do it from an employer side. So when we incorporate the business, we are with them along the way. So they will need a workplace policies. They will need employment agreements.
They will need to hire. they may need to dismiss. So we help them through that process. And then obviously international business, we do, M& A’s domestic and international, and we bring businesses to Canada. So if there is a good, a business that has a good product, good service that wants to come and serve the Canadian market, that’s what we do.
We help them establish operations here and we help them as well through the whole process, not only to incorporate you, but we are with you as long as you need us. and the same thing, a Canadian business has a good product, good service, and is looking to grow and go to another market. We help them with that process too, as well.
Jill: Amazing. And do you also help businesses if they do want to grow and expand? Do you have knowledge for them to be able to do that into the U S just curious? Cause we’re doing that for ProcureHub.
Nasira: Yes, absolutely. The US is our greatest, partner and we, there is so much exchange between the two countries. So yeah, we always have, so many Canadians have businesses in the U S. Or, us, nationals that they have businesses here though. they come and go, so yeah, we help the number one is us and then, Europe.
Jill: Okay, great. on ProcureHub, we do have a number of suppliers and service providers including human resources, and I know that, those HR experts, often will leverage the expertise of a lawyer who does have employment law experience. There are clients who may be going through some unfortunate circumstances. Often leverage, lawyers who do have that unique experience and it’s unique. Not every lawyer has that capability. So for the entrepreneurs and small and medium sized businesses out there, you may have, an HR provider within your business or maybe even, maybe an HR expert on ProcureHub. Don’t forget that you can have as well the expertise of a lawyer around employment law, and it’s important that you, leverage The partnership between HR experts as well as the legal experts as it relates to employment. I’m going to switch gears in a minute. Just a reminder for all of our listeners coming up, we are going to be talking about how to buy and sell businesses successfully after the break.
But before we get there, I’m really interested to understand a little bit more about your business and some of the things that you’re specifically seeing, as it relates to, small and medium sized businesses, entrepreneurs, what are you seeing in terms of some of the struggles, around, understanding their legal ramifications.
As an example, I had Ted Cryslet from Ted Crysler Law on not too long ago, and his expertise just happens to be in intellectual property. And he was talking about A. I. and the ramifications around AI. And Small and medium sized businesses. Is there any hot topic or anything specific that you’re seeing and talking to entrepreneurs and small businesses about now that, that is, that we need to be aware of?
Nasira: Yes. AI is definitely a number one hot topic right now. everybody’s. Everybody’s using it. That’s one thing, but people don’t know the implications of using AI. For instance, like there is, there are so many apps out there that they help you, summarize, a meeting, they take notes while you have a zoom meeting and people are so happy of using this and they’re recording meeting in a business.
And, you don’t know where this information is stored. And that is confidential information. Whatever is discussed in the business, you as an employee, you should keep that confidentially and you should not have an app. You have no idea who is. Behind it to take a minute, minutes of that, of that meeting and then giving you A summary of it.
I think those are the issues we’re going to be encountering. People are using it. And the problem is we don’t see the issue right now, but the issue will come later on. The regulation of AI is coming very slowly. In Canada, we have that act with the privacy policy that is in process. There is no advancement there because nobody can, they cannot agree on what, Regulation can we put in place for AI because it’s so new and it’s changing so much.
So that is number one. But I go, to the basics. The basics is you as a business, you should have your, your corporation in compliance means like a corporate records and to be, up to date your minute book. So that’s as basic as that. So many people, they incorporate their business by themselves.
They go to the website and they, the government website and they just incorporate and they think that’s it. Like time passes by like years, nothing happens because they are lucky. But then when there’s Oh, I need the CRA. That’s a, that’s an audit. Or, you say, Oh my God, I heard about, a minute book.
I don’t know what it is. And then they come to you. It’s wow. We have been operating for three, five years. Now we need to go back all those years and put together the minute book and everything. So I think the challenge as well is for, entrepreneurs, new, not only new people in business, but also people already in business. That they have to have, their corporate, records up to date.
Jill: And that is amazing because as an entrepreneur, you would think I’ve been in business for at least 12 years next year, and I have a minute book. It was collecting layers of dust and I never did have it updated. And then I was told by, a good friend and lawyer that I do need to have that updated and that there are requirements, that need to be met every year to stay in compliance. So it’s a good, it’s a good, reminder for entrepreneurs and SMBs that, you need to really have, great advisors around you, whether it’s, lawyers and legal advisors, accountants or accounting advisors, it’s a whole, it takes, there’s a great, and famous quote by Arlene Dickinson. It takes a community to raise an entrepreneur. And it really does
Nasira: That’s a good one. And you don’t need dust anymore. we don’t do any more paper, a minute book. It’s all digital right now. there is no reason for you to have anything like that. like a paper. Yeah. Digital.
Jill: Incredible. So when I started my business almost 12 years ago, it was all paper. and so it’s good to know. And again, another good reason why you need to have a trusted advisor, when running your business and growing your business. We’re going to take a quick break. And when we get back, this year is going to talk to us about how to buy and sell businesses successfully. We’ll be back.
Jill: All right, we are talking with Nasira El Hadri about how to buy and sell businesses successfully. First, tell us about the M&A practice and how M&A is used in business. Nasira.
Nasira: So our niche practice at Hadri All Mergers and acquisitions. So we do domestic and international M& A. So the same way we are passionate about helping individuals establish a business, we are also passionate about assisting them in the process of selling their business or buying an existing business.
So the process of buying and selling businesses is a great tool to achieve business goals. So we have different scenarios. So we can use M& A as an exit strategy, as an entry strategy. Or is it growth strategy? So as an exit strategy, we could have a, an individual who starts a business from scratch. the business does, well generates value and goodwill.
And then the founder decides to exit their business through sale. So the individual would retire or start a new business and repeat the process. So there are so many people that they are really good at, that. They, come, they create a business, they go through the M&A and they make money out of it and say, wow, I can do the same thing.
I can build another business and do the same. And it happens a lot with tech. And with, pharmaceutical, industries where you have to create something and then it creates value momentum, and then you can sell it to the next person then as an entry strategy. So we can have an individual, who wants to start a business, but instead of starting it from scratch, looks for an established business willing to sell.
So here there are many opportunities. So this individual can buy the whole business and continue the operations as it sees fit, or, he or she can buy a portion of the business or make a progressive investment with the goal of buying the whole business in the future. So this scenario is not available to every individual or entrepreneur because you need money and knowledge about the business and industry you are entering into.
And then finally the, the M& A tool using M& A as a tool to grow it. We have the example of, for example, an individual owns a business and decides to acquire a competitor to dominate the market or acquire a specific asset. Developed by another business instead of developing it from scratch in house, which could cost more money.
it’s more time consuming or maybe you don’t have the, like the vision for it and somebody else already has done it. So why reinvent the wheel when the wheel is ready? You can just purchase it.
Jill: So for those of us who are not close to M&A and the application, I have had some exposure to mergers and acquisitions. I’ve had clients as an example who are going through, a growth strategy, whether it was, trying to accelerate their organic growth through various channels, sales and marketing, but also a viable strategy around growth through acquisition or mergers. So is there. Tell us a little bit about that in terms of, when should businesses, I’ll just use my business as an example. So ProcureHub was launched a year and a half ago. I’m a typical tech startup. And for me, the tech part, The ability to grow organically is one strategy, but the other strategy is to actually look at either acquiring a component, whether it’s maybe a community that I buy in order to buy those users to complement what we’re doing on ProcureHub, or maybe merging with another business. Can you help us if, you were talking to me, what kind of things would you, questions that you would, have those entrepreneurs ask themselves so that they can figure out, is this a right fit for me? Am I the right size? Should I be thinking about that?
Nasira: Yes, definitely. So this is something like more of a legal question is more of a business question, right? Like you have to look internally whether your business is ready for that next step, right? So first of all, look into your, business health to see whether like the numbers they supported to see your growth strategy, whether it supports your numbers. And then obviously Surround yourself with those professionals that they can help you get there.
So you go for a business evaluator, a business broker. So those people will help you, a business broker will help you find that kind of business or that kind of asset you are willing to invest in. And to tell you whether it will fit your business or not. And especially like to work with your accountant hand in hand, because your accountant know everything about your business and will be in a position to tell you whether that is a goal. That aligns with your tax strategy or not, for example, right?
Jil: Absolutely. So I think it might have been Ted, actually. Ted Crysler from Ted Crysler Law, who said you need two experts. You need a really good lawyer and you need a really good accountant. And I think he’s right, because I keep hearing that as well.
Getting the right experts to help you to determine whether or not it’s the right fit for your business. What’s the right strategy. let’s talk about now, if somebody has made the decision, let’s talk about the various deal structures and how do you choose the right deal structure for you?
Nasira: So typically, I say individual, but it could be individuals. Like you can have a deal, a business can be owned by multiple people and multiple corporations as well. It doesn’t have to be like an individual. But for the sake of simplicity. So if the individual can buy a business through shares or assets, so in a share purchase, the buyer acquires ownership of the company, by purchasing a shares and taking control of all its assets, liabilities, and obligations.
So this approach allows the buyer to continue the business operations, maintaining contracts, relationships, corporate history, because the legal entity remains the same. Thank you. And then on the other hand, there is the asset purchase, which involves the buyer selecting specific assets and liabilities of the business, so allowing for more control over what is acquired and potentially reducing exposure to unwanted liabilities.
Jill: So the deal structure can be obviously, it, needs to be the right fit for the scenario that the business owner is, looking at employing, but, is there also, for example, that those who are looking for investors, or do you get involved? Is that considered part of mergers and acquisitions where you have another business who is, maybe not merging with you, but that wants to buy a stake or shares in your company. Can you talk a little bit about that?
Nasira: Yes, that’s actually one of the strategies before you get committed 100 percent into a business. What you can do is invest, right? Like you start with a smaller investment or like a bigger one, but that is a really good strategy to get your foot in and to understand the business to see whether it’s profitable or not.
You can do that. It depends. It depends whether the end goal is to acquire the business or the end or not, or the owner of the business is protective about it. And you’re a mere, investor and all you can get are, like, shares that where you have no, no right to vote, no, right to say anything on the business.
So you are there only for the money you, put, and you are going to get a share. If there is a dividend, if there is a profit, right? So those are, it’s a good strategy and we get involved. We see those, very often of people who have money and it was like, okay, so I would like to invest in a business. Maybe sometimes it’s to understand the business better to see whether you want to start a business, like that, for example.
Jill: And then maybe even a prerequisite to buying the business outright based on its performance, whether or not it has the right strategy aligned, taking an investment position within a company could potentially be a prerequisite or a precursor to the acquisition of that business itself.
Nasira: The good thing about like business in general, like in this world, there are so many options. it’s a world of there’s so many things you could do to achieve your goals that, we have different mechanisms. So when you go to us, when you come to us, maybe. You have an idea in place. You are like, I want to buy a business, but then we talk more and we say, okay, your goals are not aligned with that.
Or maybe you are not ready for this. So how about if you invest in a business instead, first you do this. So what we do as well is we help our clients, define or refine their idea. It’s like when you have a client who comes to you and says, I want a purchase agreement, and then you. Within the conversation and you understand the whole idea or the context, you like, you correct them and you say, okay, actually, you don’t need this kind of agreement.
You’re not, you need another agreement, because within the world of purchasing goods, there are so many different kinds of, types of agreements and our job is to help you see which one it is the right one for you.
Jill: So when should. A, a buyer or a seller approach you. like when should you be approached or what, at what point should you be engaged to provide that kind of advice How early is too early or how late is too late?
Nasira: There is no early, actually like the earliest, the better, just because, if you haven’t done your housekeeping, we will do your housekeeping before you take any steps that is very important. That means your corporate records seem to be, like squeaky clean. We do that, but at the same time, depends on the size of the business. If you’re, if you have a substantially substantial business, you will need help from many other actors, right? involved in the transactions. the sooner you get to us, the sooner we will help you, see where you have to go next.
And then, because we have to be with you on the deal until the end. So we are the last ones that we close the doors for you. We, complete, we do the closing steps and then obviously your accountant will be there too, but. But yeah, the sooner the better.
Jill: So you were talking about deal structures earlier. Tell us a little bit about the preferred or the benefits of deal structures for buyers. and then for suppliers, tell us a little bit about deal structures and the benefits for the parties.
Nasira: So it depends. Generally, it depends on the, the goals of the party. So what are the goals of the buyer? What are the goals of the seller?
But generally speaking, buyers, they prefer, asset purchase transactions because they have more control over the risk they are taking in the deal and they can benefit from potential benefits. tax deductions. And then for sellers, they may prefer share purchase transactions because they can fully exit the business with no remaining liabilities and obligations.
So they’re done, they sell the business, they move to something else, they don’t have to think about it. and then from a tax perspective, they may qualify for potential capital gain, exemptions.
Jill: So I’m going to unpack that a little bit for those of us who don’t understand what you just said. Tell me a little bit about what that means or what’s entailed in an asset purchase versus a share purchase.
Explain the difference for those of us who are still learning.
Nasira: Yeah, so when you are buying, you’re buying an asset, it’s an asset purchase. You are actually buying a portion of the business. You’re not buying everything. You are looking at the business as a whole and you’re like, okay, I’m selecting, I’m picking exactly what I want.
And that is really good because you’re only picking the liabilities you want to take on. So you have a, for example, you’re buying an asset. It’s like a tech asset, like a software. So you’re just taking that software and you’re not liable for anything else that happens with other software that the company owns.
Or the contracts that they have with X, Y, and Z, you don’t care about that. But then when you are buying a shares, that means you are buying the whole business. That means you’re buying a, like the contracts, the customers, the assets that they have in a real estate that they have, you usually would be buying.
The totality of the business and the risk with that is that you are buying everything you’re buying the good and the bad. So when you’re doing share transactions, we need to do a much bigger due diligence, for example, much more exhaustive because we need to understand exactly what we are buying here.
What are the legal implications? And we have to tell our clients, this business, this is these are the issues that we see in the future. This is the problem you could see. So you need to think about it as lawyers. Like we may have different opinions, but from my perspective, my job is not to tell the client what they need to do.
It’s a business decision. There are always risks, whatever you do, you’re going to find risk. But my job is to tell the client, this is the risk and you are free to take it, but you need to know the risk, right? Sometimes, I would never tell you should not do this. No, you should do, if this is a risk you can take and you’re looking to the future and you say, yes, this is something I could do.
Because it’s a business decision. That’s when we, when we are practicing business law. so many times the answer is not legal is business.
Jill: Yes. And so what I hear you saying is it’s really important to understand that not every deal is cookie cutter. Not every deal is right for one of the parties. You really need to look at it in a very, situational. from a very situational perspective to truly understand what’s right for that business. And every business is different. Every buyer is different. Every seller is business or different. And so each business needs to have the right expert, the right, legal advisor, Hadri Law to assist them with really understanding what is the right structure, the right deal, for them. So the last thing I wanted to ask about was, or actually one of the questions I have is who should be involved in M&A. So certainly you need to have a lawyer, but are there other people who need to be involved when you’re contemplating a merger or an acquisition?
Nasira: Yeah. So we actually have multiple parties involved. It depends on the size of the deal actually, but, we would have accountants, business evaluators, business brokers, and M&A lawyers. accountants, what they do is they conduct financial due diligence. So they analyze the financial health of your business and they provide tax advice on the deal structure.
The business evaluators, they determine the fair market value of the business valuation methods, guiding pricing and negotiation. and then we also have the business brokers who act as intermediary. So they connect buyers and sellers. they do marketing for the business and they assist you in the negotiation.
And then M& A lawyers like us, we handle the legal due diligence. So we draft a negotiate the transaction documents. we ensure legal compliance and protection for the clients and we complete the closing steps. We make sure that the, that every step of the deal is completed. If it’s an international M&A, so we will likely have these parties like duplicate because we will need them in different countries in all the countries that are involved.
So for instance, a deal between a party from the U S and Canada, we require the professionals, from the U S and Canada. So the accountants, we will need accountants from both jurisdictions to make sure that the deal is structured in a manner that is. tax efficient and that the rules of both jurisdictions are taken into account and then M&A lawyers to make sure that the laws of both jurisdictions are taken into account to assess risks and help clients understand the legal implications of the deal.
Jill: So for those who are contemplating either a sale, a purchase, a merger, or anything in between with all of those who are involved in a potential deal. When you’re, considering, is it, who should they, rely on to start? Is it, do they reach out to you as a lawyer? And then we coordinate the rest of the expertise to come in and support at the right time.
It’s confusing. So as a, as an entrepreneur. Help us understand, like, where do we start? Who, should be the first phone call if we’re thinking about this?
Nasira: Accountants and lawyers, M&A lawyers, we are married. Let’s say, okay, we go hand in hand. All my clients, they need to have an accountant. Okay. And all the corporations, they should have a corporate lawyer like us, right? So we are already in touch with each other. We are already working with the client because we, they filed, the accountants, they filed their, tax returns and they do their tax strategy and everything. And what we do is we maintain their minute book.
We do the corporate maintenance. So we always talk to each other. so we would be the first ones. That a deal is coming or that the client is looking into, buying or selling a business, but in the meantime, the client can also do, which is could do it at the same time that they talk to us or in a separate time after.
After or before they talk to us is to go to a business evaluator because you are curious. You want to see, Hey, I want to sell my business. Like I have this idea, but I want to know how much is worth. I can’t just talk to people and say, I’m going to sell it to you for 10 million when maybe it’s worth 15 or 20.
So I want to make sure that I’m talking about the right figures. So we go to a business evaluator. And you have that figure. So you know what you’re talking about. You know where you’re at, right? And then, the business broker would come into place. If you have an idea, you’re like, I want to buy this specific business.
Like it has to be this, this size. It has to make this kind of revenue. It has to be in this industry. And you go to the business broker and say, Hey, what do you have in your books? show me different businesses that I could sell. So then you go and you have that information. So when you come to us, it’s Hey, I already talked to the business brokers and I saw this business and I’m really interested, I would like to have a look into it.
That is when you’re buying, when you’re selling, when you already know the value of your business, or you went through a business evaluator, you already talked to your accountant, your, M&A lawyer. You go to the business broker and say, Hey, I’m going to list my business now. So I have the figures. So what, is the process? What am I supposed to do now? so yeah, the process can be. You can talk to the different parties at the same time, but accountants and lawyers were always with you the whole year. So naturally we should hear about it first.
Jill: Yeah. So most businesses will have obviously an accountant and often a lawyer as well that they work with. So yeah. Really having that those two established relationships, trusting advisors in place. That’s really your starting point. Get the advice from them. Then the next step potentially is getting a business evaluation. I know I’ve been through that process before. It can be expensive. So be prepared and make sure that you are getting the right advice before you reach out to a business evaluator. Cause it can be an expensive endeavor where you may have been able to avoid that with a great advisor, whether it’s legal or, finance. Awesome. How, give us some final words around, individuals, how can they be successful when they’re selling their business or they’re exiting their business?
Nasira: So I think the key to all of it is to be really prepared to what is coming, right? So the more prepared you are in your business and the more familiar you are with the process of buying and selling businesses, the more likely you are to complete a successful transaction. So my favorite clients are those who come to us to incorporate their business, keeping in mind that their goal is to someday sell the business.
And you’re working with them because they want everything right from the go. So they organize the business in a manner that when they are ready to sell, they’re ready. Like they have everything in place and they build the business thinking about creating value, being competitive in the market, and attract attention to how they do things.
So if you want to sell your business one day, what I recommend is, first of all, keep your corporate records up to date and in compliance, keep your minute book up to date, fill, file your, corporate annual returns, not like tax. You also have to do, but I’m talking about corporate, annual returns, file them on time, update your corporate, records whenever there is a change in your business.
So keep the business in good standing. Okay. Then also have your contracts and agreements organized and up to date. Make sure you have them stored properly. Some many clients, like they don’t like, they don’t have copies of what they have signed. And that is terrifying. So no, make sure that disagreements, are signed by all parties that they are enforced and that there is no strange clause there that could kill your deal.
Yeah. and, understand the relationship, you have with your customers, your vendors, your suppliers. for instance, do you need their consent to transfer your business to a third party? That is a very, recurrent clause in, in contracts. Keep your business away from litigation. It can lower the value of the business and even drag you into future, liabilities.
So you will see many businesses, they prefer to, to settle before they, go into litigation just because it will stay on the record. And we check everything when we are going through due diligence and litigation is a big one. also understand the value of your business. So work with a business evaluator to, to know how much your business is worth.
Sometimes you can implement changes to increase the value of your business. So you will need time, for that. So you need to plan accordingly. So don’t leave it until the last minute. when you need the money, for example, when you need to exit, and make sure that all your intellectual property is properly protected, that is the value of your business.
So the idea is to keep the business ready from day one and not have to rush into organizing it, when you are in the process of sale, that is very late. It can be very expensive and time consuming to organize it all, at the last minute.
Jill: I love at the beginning, you said you like it when clients come to you, where at the very beginning, they’ve already contemplated that they want to sell their business.
There’s actually this, book, I can’t remember the author, but it’s called built to sell and smart business owners who build or creative and build a business that they know they will build. and then sell one day, have all of those, I’ll call them ducks in a row. Like you’ve said, I’m ready to go. So it, so if you’re ever going to sell a business, even if you don’t think you’re going to sell your business, you should still ask that question. When you start your business, if I’m going to build this business, is it conceivable? I’m going to sell this business, exit this business one day. And then with that in mind. Build it to sell and make sure you have all of those assets, documentation and, all the structure, in place and in mind before you even think about selling the business. Amazing.
So I can’t believe we are at the end of our show. It went by so fast. That was a great, discussion and, and amazing insights from you. I really appreciate you taking the time and, coming on the show and sharing your incredible insights. Thank you so much for being on the show.
Nasira: Oh, thank you so much, Jill. It’s been a pleasure. And there is so much we can talk about. I say, so this is a huge topic. We can talk about so much, but time it is what it is. thank you so much for having me.
Jill: Yes. I will definitely have you back on the show and unpack more of your incredible knowledge and insights. for those who are interested in connecting with Hadri Law, is actually a valued member of the ProcureHub Marketplace.
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