To Sell or Not to Sell
Joseph Lavoie and his brother, Jeff, had already been approached by other entities for purchase of their Cable and Internet company on the remote islands of Haida Gwaii. Offering full internet and TV service via wireless, coax, fibre and digital, their unique geographical location meant that they had a limited clientele but few competitors.
In 2018, Gwaii Communications won a “Connecting Canada” grant, which allowed them to bring state-of-the-art internet to their remote location. The $4.9 million project included installing seven miles of subsea cable, ultimately connecting 650 rural homes to the service. When the brothers were initially approached by Stage Left about the sale of the company, they were still in the thick of this complicated project and didn’t give the offer serious thought.
Not only that, the Lavoies were relatively young and far from retirement. With many years of their own M&A experience in other industries behind and ahead of them, they weren’t in a rush to sell. “It either had to be the right price or we were going to continue to build the business,” said Lavoie. There were other things at stake for them as well.
A Unique Company with Unique Parameters
The brothers had built valuable reputations in the small community that were based on high standards of service. “We still have to live in the community,” he says—any of their customers could still call them at any time for assistance, and they were hesitant to invite a major telco company in to such a small space.
Plus, they were loyal to their employees who had been there to help them build their business. Their workforce was mainly skilled technicians; they had created highly skilled jobs in the area, and it was important to them that these jobs weren’t outsourced away from the community.
Further, Gwaii had committed to building out fibre to the rest of Haida Gwaii. And they wanted to see this goal followed through on.
“That was one of our business objectives, so we thought that if we could sell and still accomplish that, then it was a successful transaction.”
Of course, price was a factor too, and they had a hard minimum asking price.
All of these factors were non-negotiables for them. But they were of the mindset that it wouldn’t hurt to listen, so they heard Stage Left out, then brought them their specific parameters. Stage Left agreed to meet the parameters, and it was decided to explore the opportunity.
From Transaction to Final Signature
Darren Dumba and partners approached Gwaii Communications to take part in a combined deal at the end of October 2019, and the transaction took under a year to finalize.
Interestingly, Gwaii Communications was the first telecommunications company that the brothers ever owned. They handled several other acquisitions on their own. However, they didn’t have a good understanding of how to value a company in the Telco industry. They also didn’t understand that they were more valuable simply because they had no viable competition. “It’s hard to value a business like that – it depends on tech and assets, recurring revenue and cash flow,” says Lavoie. So, they were wading into unfamiliar waters.
For Lavoie, what Stage Left brought to the table was expert experience in the M&A space and superb Telecommunication industry knowledge. Also, Stage Left’s ability to organize a complex transaction that contained many moving parts and many different players simplified the entire process.
“Going through a large M&A like that – it’s very helpful to have things laid out, step by step, and that’s exactly what they did. It gave me a mental and visual roadmap so that I could follow along, while I was still running the day-to-day business.”
Lavoie admits that he’s a straightforward decision-maker who values people who aren’t ‘yes’ men; he looks for people who are straight-shooters and will give him their honest opinion, and Stage Left did that throughout.
“What I felt like I got with Stage Left was experience, structure and industry insight to help us through the transaction,” he says. This was an important sale in an unfamiliar industry, and Stage Left provided the right level of expertise and support.