South Island Communications

With 20 years of growth and as a leading regional cable and Internet Service Provider, BC’s South Island Cable was acquired by TELUS in 2019 in a transaction successfully facilitated by Stage Left Partners.

A Challenging Market

Operating out of Port Renfrew on the west coast of Vancouver Island, South Island Cable Ltd. was a locally owned and operated Internet provider. As the Founder and President of South Island Cable, Andrew Hofmann had owned the company for more than 20 years.

While the business had grown significantly and was performing well, the endgame for Hofmann was to sell the business once he had built it up to a certain point – and TELUS, as a dominant player in the BC telecommunications industry, had always been considered a prime target and potential buyer.

Although he admits that he might have waited a few more years before exploring the sale of the company, Hofmann recognized that the industry was becoming a highly challenging place. Faced by growing customer demand for more bandwidth, South Island Cable was reliant on TELUS for increased Internet capacity, while at the same time supposedly competing with them for market share.

Selling the Business

With no option for purchasing additional bandwidth, Hofmann felt that his company was hamstrung and began to make a mental shift towards a future sale. The timing felt right.

He was already familiar with the work of Stage Left Partners, having been involved in the acquisition of another British Columbia-based cable company, Mascon, by TELUS in January 2017. He had known Darren, one of Stage Left’s partners, for many years and knew that any future sale would be handled by Darren’s team as a result.

Although he was confident in getting a strong result from the transaction, Hofmann had doubts as to whether the price would be good enough for his future needs and also if he’d be able to secure a role in the industry after the transaction, especially if he had signed a non-compete with TELUS.

The transaction took a little under a year to complete and, on July 1st, 2019, South Island Cable Ltd. was purchased by TELUS in a complex combined deal with a total of five regional ISPs, and with all operations to be transitioned into TELUS forthwith.

From Transaction to Closing

Stage Left acted as the trusted advisor throughout South Island Cable’s sales process, handling all of the negotiations, administrative, financial and legal aspects of the acquisition. Hofmann was surprised at the sheer volume of work that went into negotiating with a publicly-traded company, such as TELUS, to buy a smaller ISP, particularly when doing so on behalf of a collective group of five very different regional companies.

The process went simply and smoothly, and this was in no small part thanks to the Stage Left team. He was particularly impressed at how they positioned the deal as one transaction, even though it involved the acquisition of a diverse mix of companies, and yet they were still able to represent each individual business’s wants and needs.

In Hofmann’s mind, Stage Left did a fantastic job of shielding his company and its people from the “noise” of the overall transaction, while remaining focused on bringing them together when it was important and the right time to do so. This made the entire process seem much easier than it really was – the Stage Left Partners really did do the heavy lifting for South Island Cable’s team.

Another aspect of this multi-company deal that proved important was Stage Left’s ability to act as the liaison with TELUS on behalf of the various owners and, in doing so, restrict access to TELUS to when it was absolutely necessary. This was crucial because if everyone had been given access to the corporation, the deal could have been blown wide by the different personalities and emotions at play. Stage Left intimately knew who to hold back, and when, in order to keep the deal moving forward in an orderly fashion.

What’s more, as a small business owner and on the verge of selling something extremely precious, it meant that transparency, honesty and “having his back” were all extremely important advisor traits. South Island Cable was Hofmann’s “baby” after all.

“Stage Left were transparent and honest throughout the process. When the purchaser indicated its interest in just one of the five companies for sale, they could have sold that one, and simply moved on. Instead, they demonstrated the value of buying all five companies at the same time in a very professional way. And they got the deal done.”

Beyond the Deal

After the deal was finalized and the dust began to settle, you might be forgiven for thinking this was the end of Stage Left’s work as the trusted advisor. For South Island Cable, ongoing support wasn’t necessarily needed, but it was always going to be valued.

“We didn’t need the same amount of hand-holding as some of the other companies,” says Hofmann. “Still, the guys would pick up the phone and follow everything through to the end, making sure that every item was closed off and finalized, and this was appreciated by us all.”

He acknowledges that dealing with smaller companies like South Island Cable takes a lot of work – there are less resources at the disposal of these smaller companies, bigger personalities involved and far greater emotion. It can be a minefield for an advisor in managing the different individuals and resources available to them. But Stage Left were the consummate professionals, even bringing in an M&A lawyer for the finer points of the deal.

“By bringing in an expert M&A lawyer, they saved us a huge amount of money by not having to hire our own legal people. Their actions always revealed that they had our best interests at heart”.

Could they have done anything differently? It’s a tough question to answer when the experience has been so positive. Perhaps they could have had a permanent lawyer on their staff to ensure 24/7 access if need be, but Hofmann feels that he’s splitting hairs to find problems with anything that Stage Left did.

Stage Left made a daunting transaction feel like an incredible experience – now that he works on the other side of the table in his current role, Hofmann knows just how much work goes into these kinds of deals, and the process is far from easy.

Worth every penny, it was felt that Stage Left Partners really do put their clients’ best interests first. In doing so, it appears to be less about the money and more than just a dollar transaction, but instead about finding the right solution for their clients. While other companies seem “cookie cutter” in their approach to M&As, Stage Left took a personalized approach – it was more about the relationship than the deal because these are people’s livelihoods, their dreams, their nest eggs after all.

There was another important aspect about Stage Left. They demonstrated their ability to work with a large corporation like TELUS and understood how decisions get made in their environment. The Stage Left team has extensive experience working for large corporations and, at the same time, understands the mind of a small business entrepreneur. Being able to bridge the two cultures and mindsets was crucial to getting the deal over the line. Hofmann felt that Stage Left has the kind of experienced practitioners who can work with these big corporations. If one of them doesn’t know the answer, the other one will.

“They were the complete one-stop shop – bringing a diverse mix of experience and expertise to the deal, knowing who to use and when, and ultimately providing the right resources needed to ensure a successful outcome for our business”.

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