Make Me a Deal

 

Kaz Novak, the Hamilton Spectator Doug Robbins says a business should be priced to match the reasons its buyer has for purchasing.

Doug Robbins is in the business of selling businesses

By Meredith Macleod
The Hamilton Spectator (Nov 7, 2005)

Doug Robbins just might be addicted to closing the sale.

In the last 30 years, he's helped to sell hundreds of other people's businesses, along with more than 30 of his own.

There are only a few dozen business brokers in Canada and Robbinex Intermediaries, at 31 years, is one of the oldest around. It started out as a oneman operation, but now Robbinex is poised for a rapid expansion into the United States that will more than double his staff.

It might be part of the love of the sale. "I would have been happy as just one person, with maybe a good secretary. We got carried away," he laughed.

Robbinex helps privately held companies with revenues between $1 million and $50 million sell their businesses. It may sound straightforward, but Robbins says the process is complicated, emotional and time consuming. A sale can take up to 18 months, but clients often stop and start the process, so it stretches out to three to five years.

" We're dealing with lifealtering decisions.

It doesn't move quickly."

It takes about 700 working hours and 200 separate business functions to sell the average multimilliondollar business. The selling team includes researchers, valuators, accountants and consultants who qualify buyers.

Intermediaries have to understand the goals and aspirations of sellers, the motivations of buyers and the strengths and weaknesses of a wide variety of businesses.

Robbinex has handled more than 1,000 cases over the years and no two have been alike. "I just love it. I can't wait to get out of the house and get to work."

Robbinex examines every aspect of a business marketing, location, financing to find any means to enhance its value. It then develops a tax plan to ease the hit of selling. Often there are family issues involved. Perhaps some family members don't want to sell or there are no successors to take over. Sometimes business owners have a hard time letting go.

"Most people don't want to think about life after business. If they sell on Wednesday, they are just as healthy, energetic and enthusiastic on Thursday, but they now have nothing to do."

Robbinex employs an industrial psychologist to help entrepreneurs make that transition. It's a complex issue because many pour their passion into their business and extract their sense of purpose from it. In many cases, it's hardship death, illness, divorce, bankruptcy that leads a business to the auction block.

Other times, Robbinex works out the problems in a business to get it ready to sell and the owner changes his or her mind because suddenly their business is working well.

Most clients are in service, manufacturing and large retail. Among the 80 open files now is a foundry, a giftware manufacturer, a hydraulics business and a small chain of fastfood outlets.

Robbinex charges consulting fees,along with a commission on the sale.

Doug Robbins says a business should be priced to match the reasons its buyer has for purchasing.

The average sale gets about 200 inquiries from potential buyers. "It's tedious to find the right buyer. It takes money, management and motivation. If one is missing, forget it. We don't show any documents to anyone we're not satisfied can write a cheque."

Robbinex targets its potential buyers from among a company's competitors, suppliers or customers.

" The highest price will come from a strategic or synergistic buyer. They are already educated about the industry."

One of the biggest challenges is that business owners are usually way off in estimating the value of their company. "If you're unrealistic, it just won't work. If you price too high, you'll never sell. If you go too low, it's gone instantly." The key is pricing according to the reasons a buyer is buying.

Robbinex attracts clients through dozens of seminars and workshops held with business owners throughout North America each year The company usually does 50 to 75 sales a year but there have been rough times, too. Robbinex catches the first winds of recession and the first signals of recovery.

There have been years with just two sales. After 9/11, it didn't make a bank deposit for eight months.

Robbins started out in business at 14 with painting and lawn cutting. At 24, he and some friends opened a couple of pizza shops in Hamilton and Burlington. They made great pizza, he says, but broke every rule about business, partnerships and keeping financial records. He worked for A&W Restaurants as a manager for Ontario. He helped sell stores when franchisees wanted to retire, experience that convinced him he wanted to sell businesses for a living.

He's owned many of his own businesses, including an alarm company, a party store and a furniture manufacturer. "I've opened about 30 businesses. I sold the last partnership about a year ago. Since I've expanded Robbinex, I don't have time for anything else."

The company employs 17 people in Hamilton and 10 in offices in Baltimore, Buffalo, Los Angeles, Portland, Ore., San Francisco, Philadelphia and Windsor. Robbins expects the staff in Hamilton to more than double to 40 in two to four years. The vision is to open 60 offices in the United States in six years.

That means a new headquarters is in order. Robbinex is tucked away in a charming 136 year old brick building on Stuart Street.

He'll soon move to a much bigger location at Hwy. 20 near the future Red Hill Valley Parkway. "It's never been work for me. I never once look at the clock when I'm here. That sometimes gets me in trouble with my wife. But since 1974, I haven't worked. This is my hobby."

Best part? You learn new things every day

Doug Robbins of Robbinex Intermediaries talks about success.
Biggest challenge:
" Locating good people who are passionate about what they do and who are willing to be trained. They don't have attitude, they just want to go someplace. It's been a huge challenge since Day 1."

Biggest surprise:
" About four years ago, I hired someone. I figured I could teach him in four to five months everything he needed to know. It took three years. It woke me up to how much I know about this business. I've really learned a lot and I've become more of a teacher now. The best part of this job is that you learn new things every day."

Best decision:
" Investing time and money into developing a threephase process ( for valuing and selling businesses) and taking it through ISO regulation. It cost close to $1 million and took eight years. It sets us apart from our competitors."

Worst decision:
" I've invested in businesses I shouldn't have and I've made bad decisions about people. One of our companies was embezzled for $750,000. It was disappointing but you get on with it and you learn from it."

Learned the most:
" My accountant and mentor used to say to me, 'Robbins, if you're so smart, why aren't you rich?' I've learned so much from him. Our clients are our best teachers around here. If there's something I don't know, I always know who to phone."

Best advice given:
" Buy real estate because they're not making it anymore. If you can pay the rent, you can pay the mortgage."

Best advice to give:
" Don't be afraid to ask questions. Surround yourself with competence and then listen to it. Whether it's your customers, your employees, your advisory board, your suppliers, wisdom is all around."

Secret to success:
" Three Ps: patience, persistence and a passion for what you do. There has never been a day when I didn't want to come here."

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