Buying a Business to Sell It

March 15, 2019 |  

About this episode


To read a transcript of this episode, click here.

Connie Fenyo started out as an employee at Dye & Durham, a company that makes software for lawyers. She rose to Executive Vice President when she learned her boss was looking to sell the 200-employee firm.

Fenyo decided to make a bid.

She scraped together all the money she could find, borrowed (in return for a personal guarantee) everything her bank would lend her and got the former owner to finance some of the acquisition price.

That’s when she found herself –deeply in debt–as the proud new owner of Dye & Durham. Fenyo had gambled her entire life savings and committed that if she could ever work her way out from under the mountain of debt, she would sell Dye & Durham. And that’s exactly what she did.

In this episode, you’ll learn:

  • How Fenyo financed her purchase at tremendous personal risk
  • Fenyo’s strategy for prioritizing debt payments while growing her company
  • Why selling a business can be its own full-time job
  • Fenyo’s single most important piece of advice when selling your business

Fenyo’s sale began with her ‘magic number’; the price she’d dreamed of getting for Dye & Durham from the day she purchased it. Figuring out this number is part of ‘The Envelope Test’, Module 12 of The Value Builder System™. Start for free right now by getting your Value Builder Score.

Thanks for the referral!
Thank you to John Nieuwenburg, Business and Executive Coach at W5 Coaching and Certified Value Builder™ for recommending Connie as a BTSR guest.

About Our Guest

Connie Fenyo is currently the President & CEO of Weber-Fenyo Holdings Inc., an investment company, is the Author of the upcoming book “Leadership Lessons from a CEO to her Children”, a book for aspiring young leaders on how to get ahead in life and acts as a consultant in the legal software industry.


John Warrillow:                 You know, the hairs on the back of my neck kind of go up when I hear people say that businesses shouldn’t be built to sell, they should be built to last, that they should be purpose-driven and not profit-driven, and that they should try to change the world, but never the owner should ever sell, because that is a money-grubbing thing to do. For those people who hold that attitude, I have Connie Fenyo to introduce you to. Connie is the owner, was the owner, of Dye & Durham, a company which she’ll explain to you in a moment. But, as she will describe, she took tremendous risks and went through incredible hardship to get her business to a point that it was for sale. She sold it for the number she dreamed of, and she earned every penny.

John Warrillow:                 Here to tell you the story is Connie Fenyo.

John Warrillow:                 Connie Fenyo, welcome to Built to Sell Radio.

Connie Fenyo:                   Yeah, thanks, John. Happy to be here.

John Warrillow:                 Dye & Durham. What did you guys do? It sounds like an accounting firm, Dye & Durham. But it wasn’t, was it? Tell me what you guys did.

Connie Fenyo:                   Well, if it was an accounting firm, it’d be a lot easier. But it really is a multi-faceted business, John. The company itself is quite old, it was incorporated in 1874, so a number of owners-

John Warrillow:                 That blows my mind, by the way.

Connie Fenyo:                   Yeah, we were one of BC’s oldest companies. Actually, one of BC’s largest companies owned by women. I guess I was fortunate enough to make the top ten list, top ten employers in BC, Business in Vancouver, several years in a row. So we had-

John Warrillow:                 Fantastic. So, what did you guys do?

Connie Fenyo:                   We did a number of services. It was really a land … Well, I guess you can say it was a manual search and registration business. We searched public records and we filed documents. Over at the land titles office, we filed documents, mortgages, personal property registry, manufactured homes, corporate registry-

John Warrillow:                 So, who would buy that service?

Connie Fenyo:                   Who would buy that?

John Warrillow:                 Who would buy that service? Who’s a customer? Who would have been, would it have been lawyers that would have used that, or … ?

Connie Fenyo:                   Yeah, pretty much. Any lawyer, in fact, most law firms in the province, we did business with. We also ran the largest and most extensive process serving company in BC as well. We looked after the Insurance Corporation of British Columbia, so every time anyone ran a red light in the province, it was our company that actually served the ticket. It was a very interesting business, for sure. Very, very multi-faceted and I was really fortunate to have a fantastic group of people.

Connie Fenyo:                   I guess what happened is, when we sold it, when I ended up selling it, it really became a software solutions provider. We had developed a global due diligence division, that sort of expanded to reach across Canada, and globally. So that due diligence division took off like a rocket. It was a … I guess you can say it was like taking a travel agency and making it into an, and that’s really what we did for searching and filing of public records for our clients, on behalf of their customers.

John Warrillow:                 Okay, that’s super helpful. So it was a very manual company when you bought it, and it became very technically driven.

Connie Fenyo:                   Very much.

John Warrillow:                 Just briefly, because it started in 1874, I can say with a high degree of confidence that you did not start it. So, how did you end up becoming the owner of it? Explain that to me.

Connie Fenyo:                   Sure. Actually, two guys started it, Sydney Dye and Shirley Durham. They ran it out of the back seat of their car. They had a printing press and they sold printing services. That’s really how it started. In fact, one of my customers gave me a business card, back when telephone numbers were only four numbers, and he was so proud that it was printed by Dye & Durham. It was a colored business card, printed in nice glossy colors.

Connie Fenyo:                   But no, I was the executive vice president for the company, and I had run the search and registration division. I was traveling back and forth between British Columbia and Ontario. I did that for a number of years, and I’d help the owners sell off … They owned several companies at the time, and I had worked with them on some of their selling of the businesses. When it came time to look at our business, I thought, well, why not? I mean, I’m ready, I’ve been running it, I know the people, I know the employees, I know the stakeholders, I’m pretty much aware of all the skeletons that are there in the closet. So I offered to buy it.

John Warrillow:                 The why not is the number, though. Okay, so let me know how you … The why not, obviously, I’m assuming it would be a lot of money. I’ve got so many questions around that. How did you come up with a valuation for the company as it was when you chose to buy it?

Connie Fenyo:                   John, I wish I had read your book before I bought the company, and I wish I had read your book before I sold the company. I didn’t know anything about buying businesses myself. It was such a scary time. I bought it in 2008, the whole financial world was imploding.

John Warrillow:                 Oh, yeah.

Connie Fenyo:                   I had a deal … Well, at that time, it was a very … World banks around the globe were experiencing significant difficulties. I actually had a deal, and it was a sort of risk up. We had to start from the beginning, and I had to find more than a million and a half dollars over night. That’s on top of the loan with the bank I already had. So, where does one go and get that kind of cash, and the purchase price was significantly greater than that. I learned about different kinds of ways to buy companies in a hurry.

John Warrillow:                 Teach me.

Connie Fenyo:                   I wanted that deal to go through. Yeah, for sure.

John Warrillow:                 Teach me.

Connie Fenyo:                   Learned about angel investors, learned about vendor take-backs, learned about subordinated debt financing

John Warrillow:                 Okay, so I need you to explain those to me. You guys, you arrived at a price, it sounds like. What led to the fact that the price went up, or you needed to find another million and a half dollars?

Connie Fenyo:                   I had a deal with one of the banks, one of the registered banks, but it was a very tenuous time in October 2008, from a financing point of view, for the world. The deal that I thought we had is not the deal that I actually had, so I needed to find, in order to complete the purchase, I had to come up additional cash in order to complete it. Arriving at the selling price, I thought we had arrived at a selling price, and then the whole working capital conversation happened. I needed to come up with more cash that I actually didn’t think I would require, so that’s when I started to look at some of the other options.

Connie Fenyo:                   I decided that angel investors were not for me. I didn’t want other people demanding the kind of return that would be necessary. I knew the business, we’d have to build the business, we’d have to transition the company, there’d be a significant amount of investment that would be required to transition it to an electronic, online company, as opposed to a very manual intensive business. I didn’t want other owners, so that option was out. Subordinated debt financing, mezzanine financing, there’s quite an arduous process you have to go through. Those financers are very, very, very intense in terms of what they’re looking for, and your interest rates are significantly more. You’re at 12, 13, 14, 15, 16, 17%.

John Warrillow:                 Connie, can you describe for folks who’ve never heard of mezzanine financing, what the difference between a traditional bank loan is, and what a mezzanine financing would be? Can you just describe it in layman’s terms?

Connie Fenyo:                   Yeah, sure. A bank will usually look at your assets. You will be required to put something up personally, usually it’s the receivables of a company. And they’ll agree to loan you a certain amount at a competitive rate. That’s the big five banks we’re talking about. You know, TD, BMO, Royal Bank, CIBC.

Connie Fenyo:                   But when you go to subordinated debt financing, this would be like Vancity, a number of other financial institutions that will lend you money, and they will usually take a subordinated position to the primary lender, which means they are second in line. They are second in line. The top tier banks will always want to be first in line. If anything goes wrong with the business, they will want their cash, and you’ve got to make sure that they are taken care of. And because subordinated lenders are second in line, there’s a lot more personal investment required of you, the company, and because it’s more risk, their interest rates are significantly higher.

John Warrillow:                 When you say personal investment, Connie, do you mean a personal guarantee that the mezzanine financer is asking for?

Connie Fenyo:                   Yeah. For sure. Personal guarantee. I mean, you, your kids, your grandkids, it’s scary when you think about it.

John Warrillow:                 Let’s go back to your story for a second. 2008, the world’s coming to an end. You’ve got a deal, it falls apart, the bank says, “No, we’re not going to do that deal. We need you to put more money in.”

John Warrillow:                 Where’d you get the extra money?

Connie Fenyo:                   They didn’t say they’re not going to do the deal, they just said they’re going to give me some cash, but I’ve got to go get the rest somewhere else.

John Warrillow:                 Where’d you get the rest?

Connie Fenyo:                   Well, I went to a subordinate debt lender, I went to Vancity, and they were fantastic. At the time I was dealing with Axel Christiansen, a very thorough, wonderful man. Really, really went to great lengths to understand the business. The business isn’t a typical business, it’s not the typical mom and pop that you would, with a simple product line that makes sense. I mean, we would finance, really, I mean, if you’re going to buy a house, there’s a property transfer tax that has to be paid, and we would pay that on behalf of our legal client. It would be in trust, of course, but that would mean our bank line would be fluctuating, up and down, hundreds of thousands of dollars. And that’s a scary thing, if you don’t understand the business.

John Warrillow:                 Connie, how big was the company in 2008? How much revenue or number of employees? I’m just trying to get a sense of how big it was.

Connie Fenyo:                   Well, we had five branches in British Columbia, and we had more than 200 employees.

John Warrillow:                 Got it. Okay, so this is a good size company in 2008. You do the deal, some bank debt, some mezz debt or mezzanine financing. Did you also-

Connie Fenyo:                   And then vendor-

John Warrillow:                 Personally-.

Connie Fenyo:                   Yeah, vendor take-back. I went to the seller and said, “Listen, I can’t come up with the cash. Can you loan it to me and I’ll pay it back to you over a period of time?”

Connie Fenyo:                   Which the owners graciously agreed to do.

John Warrillow:                 What proportion of the sale price was in a vendor take-back?

Connie Fenyo:                   I would say, almost 40%.

John Warrillow:                 Okay, so you basically … What’s that?

Connie Fenyo:                   It was a big chunk.

John Warrillow:                 A big chunk, right. So you’ve got, you buy this company and you’ve got a lot of … Oh, my other question is, did you have to personally guarantee the debt?

Connie Fenyo:                   Yeah, I did. I did. I mean, luckily at the time I had a very understanding husband who said if this is really what I wanted to do, he would support me, but basically everything we owned, we had to put on the line. Everything.

John Warrillow:                 Wow. I just have this image of … You know the Las Vegas blackjack player, when he or she kind of puts all the chips on the table, and it’s like …

Connie Fenyo:                   That’s what it was, John, it was exactly like that. Except the difference is, I knew it was going to be a good company. I knew the people, I knew … I understand the threats that were facing the business. I knew what we had to do. I was comfortable with the employees. Bless them all, I was so fortunate with all those wonderful people. And I knew the stakeholders, so I didn’t see it as a gamble. Yes, I put everything I owned, so yes, if you’re … The only difference I would say is that I knew it would win. I didn’t doubt that, although when I think back about it now, it’s like, “My goodness, what were you doing, Connie?”

Connie Fenyo:                   But at the time, I didn’t think that way at all. I knew it would be good. I just knew it.

John Warrillow:                 That’s incredible. So, what multiple of EBITA, and if you can’t answer this directly, I understand, but if you can kind of nibble at the edges and give us a bit of a sense, what multiple of EBITA did you buy the company for?

John Warrillow:                 I’m guessing by the silence that you can’t answer that directly, or were you just doing the math?

Connie Fenyo:                   Not directly, but I bought it between … It was a great purchase price. It was a fair purchase price at the time, because the owners knew that it had to be transitioned. It could have gone either way, it could have gone under. Several of our competitors in the same business did go under. It was turbulent times, trying to transition that company to what we ended up as, and it continues to grow to this day.

John Warrillow:                 So, would it … And again, if you can’t answer, I totally understand. Would it have been sort of less than five times earnings?

Connie Fenyo:                   When I bought it, it was less than five times earnings. Yeah. When I bought it. When I sold it, that was different.

John Warrillow:                 Yeah, totally, and again, I wouldn’t be doing my job if I didn’t ask you, and you don’t have to tell me, so that’s totally fine. But I’m trying to get a sense of, when you bought it, sort of it was all in, debt, mezz debt, personal guarantee, the whole nine yards, and a vendor take-back for a big chunk. And you started to run. So how did the company afford to pay all of those interest payments? Was it a profitable company that allowed you to pay off Vancity and the bank, kind of along the way? How did you afford to pay the debt?

Connie Fenyo:                   Less of a cut. I earned more when I was working as an employee of the company than when I was the owner of the company. Some of my salary and compensation went toward repayment of the debt, and the business itself, we worked to make it profitable enough that we could make those payments. It really was, any profit we invested back in the company, and we paid the debt. There really wasn’t anything else left after that. We took care of the employees. It’s a service business, everything depended on them being able to provide the service. It didn’t mean any cuts for any of the employees except me, the owner. And then we worked to pay it off with the proceeds from the business. And that’s how it was for several years. We ended up paying it off. Was hell-bent on making sure we paid off that mezzanine debt first, that high interest rate. I mean, everything we had we sort of … Any cent we could get, it went toward payment of that first.

John Warrillow:                 Got it. So, you were cutting your salary and really making the business more efficient to pay down the mezz debt. Because eventually, making this transition, in your own words, from a sort of a travel agent to Expedia in the legal industry, how did you raise the money to invest in the technology to make that transition?

Connie Fenyo:                   We were very creative in our development. We had a fantastic development team. We had several law firm partners that worked with us on the development of our products, of our software applications. So I didn’t really charge them for the software applications, they worked with us to make it better, but of course as part of the deal they didn’t have to pay for it in those beginning years. We had a wonderful group of partners that were very interested in helping us develop solutions that would offer better solutions for their clients, like a corporate record management system, a conveyance system, an online ordering tool.

Connie Fenyo:                   And as we paid down the debt, we were able to put more and more into the development and the technology and the research that was required. We’ll get to exiting later, but it was really a significant chunk that went towards development, IT development. Especially in those transition years. Everything, we had to take it from a very, very, very manual intensive paper … I mean, just think about any time you’ve got legal documents. There’s stacks and stacks and stacks of papers. We used to drive around the entire province, picking up and delivering documents, paper documents, to our customers. Standing in lines, filing in all of the different registries. We had to take that and put that all online.

John Warrillow:                 Fascinating. So, let’s get to the next stage. How big did you get the company before … When you decided to sell, how big had you gotten the company? You were 200 employees or so when you bought it in 2008. What were you up to when you decided to sell it?

Connie Fenyo:                   I really can’t disclose the sales, but we had grown in sales every year since I purchased the company. That in itself is quite astonishing, because we actually had to cut our prices by almost 35-40% at the time. When you are offering online services and you are offering direct access to government databases, your clients expect that, one, it’s going to be faster, and two, it’s going to be more expedient, and three, it’s going to cost less. And not only that, we had governments that were offering the same kinds of services, and when they’re offering it for free or at a significantly reduced price, we actually had to lower our prices. So the fact that we could grow the business, even though we had to lower the prices while we went through that transition, it was a very, very interesting time. Very interesting time.

Connie Fenyo:                   And because we were able to put a lot of this online, we had several of our employees that were able to work from home. We ended up going to some part-time flex time, which actually worked out better for our employees. Many of our employees had been with the company 25 years or more. We had something called a quarter-century club. I mean, incredibly loyal, loyal employees. So transitioning them to this whole electronic world, it was a very challenging, challenging time for sure.

John Warrillow:                 But even still, you managed to grow sales. I know we can’t talk about the number, but on a percentage basis between 2008 and the time you sold, did you … Was it up 50%? I don’t think we talked about how much sales you had in 2008, but just on a relative term, I’m trying to get a sense. Did you double the size of the company, or grow it by 10%, or … Just a sense of how much bigger it was when you sold it.

Connie Fenyo:                   Let’s see. If I can get into it, we had to stabilize the business, and then we had to transition the business, and then we looked at growing the business. So there was the stabilization, there was the transition, and then there was the growth. Being able to grow the business every year, if you look at that particular growth, and it was steady growth. We were running between 3 and 10% growth per year with prices that were knocked down almost 40%. So it was significant, because not only did we have to make up that 40% we lost, we were able to grow it on top of that.

Connie Fenyo:                   So in 2008, selling the service for $20, versus 2016 selling the service for $10 or $12, it was a significant fight. It’s not a straightforward answer, because you’ve got to make up for what you lost in transitioning from paper to electronic and competing with government that is free or relatively reduced cost. So we had to make up that price difference, and then we were able to do that and then grow on top of that.

John Warrillow:                 That’s a huge achievement, for sure. What precipitated your decision, or what triggered, maybe is a better word, your decision to sell the company?

Connie Fenyo:                   Wow, that’s a good question, John. I knew when I bought the business, I knew I would exit the business. I mean, it wasn’t … A very intense business. You had to be on top of legislation all the time. And as governments became offering their services to the public directly online, we were looking at, “Well, what could we do to add value to our services along these gateways, along these pipes?”

Connie Fenyo:                   And then we said … As well as becoming the pipeline, so we were looking at what could we do, and that came at enormous cost. I knew that if we were going to continue to grow, and we were the leading, we were the number one provider in British Columbia in this field. If we wanted to grow, and grow and remain viable, remain at the top, we would need to invest a significant amount into developing technology, transitioning the business to a legal software solutions provider. And it is the leading software solutions provider as we speak at this time. If we were going to do that, it would require tons and tons and tons of investment, and there was just me. I was the owner. I had bought out 100% of the shares of the organization back in 2008. There’s just no way I would be able to continue to put and invest those kind of dollars, that kind of coin back into the company in order to continue to grow it.

Connie Fenyo:                   Every government you deal with, whether it’s here in British Columbia, across the country, whether it’s the corporate registry, the land title office, all of the various court registries, manufacturing, all of them, they all have their own … Many of them have their own legacy systems, how you’ve got to connect with them, how you will in turn offer your services to your clients. It just became apparent that we were going to need some significant investment, and not just small, but significant. So I knew that we would have to sell the company.

Connie Fenyo:                   I wasn’t expecting to sell at the time I did. That kind of came much earlier than what I was planning. My husband at the time, fantastic guy, I’m so blessed to have had him in my life, he got sick. That just came out of left field, he had a diagnosis of terminal cancer and we were told to get our affairs in order. He ended up lasting several years, which we hadn’t expected, but I was at the hospital. I remember working at the hospital doing RFPs, I was with him during his treatments, writing proposals. It was just a lot. Then he did pass away, and for me, that was a, it was a real adjustment. It really made me look at, “Well, what do I want to do with the rest of my life? How do I want to spend my time?”

Connie Fenyo:                   I didn’t position the company to sell it, it was just amazing how the universe kind of falls into, everything kind of falls into place. I had an offer on the business. I was speaking with several people in the industry, and of course we were a prime acquisition target. We had pristine government contracts, we offered stellar services, we had a fantastic customer base, and our employees were loyal and knowledgeable and treated the company like it was their own. It was a fantastic business opportunity to buy. I had one potential suitor that was sort of discussing taking over one of the divisions, and then I had another suitor, a colleague of mine introduced me to someone else who was interested in buying the company right there and then.

Connie Fenyo:                   I entered into, I signed a letter of intent with that second company. They said, “What’s your price,” I said what my price was, and I thought that … That’s only the beginning in an exit. That is only the beginning, but at that point I didn’t really know that. I had bought companies before, but selling, I thought would be a piece of cake. And wow, that’s really an understatement. But I signed this letter of intent, and while I was in discussions with that company, a third company … I ended up having lunch, they talked and said they were really interested in progressing talks about buying, but I had already committed to the second company. So kind of out of nowhere, one, two, three suitors kind of came out of the woodwork, and it all sort of fell into place very quickly. I didn’t engage a broker to position the business to sell it. If I had done that, I certainly could have got a lot more for it than what I did. A lot of lessons learned there in … You hear your price and you think, “Oh, okay, well, that’s good. That’s what I need. That sounds good to me.”

Connie Fenyo:                   I mean, there’s a lot more to it than that. So, really, it was the investment of the, required to keep the company sustained, a viable company, and continue to grow it. There was the issue with my husband’s health and the realization of, “Life is really short, what do you want to do with your life?”

Connie Fenyo:                   And then we had, fortunately, three different suitors sort of come out of the … We had been in talks with one for a long time about working together in partnership, and then this second one popped out, and a very decisive CEO knew definitely what he wanted. We took the deal from there.

John Warrillow:                 How did you arrive at your price? The second suitor said, “Okay, Connie, what do you want for your company?”

John Warrillow:                 And you shared a price with them. I understand you’re not able to share that price, but I’d be curious to know what your thought process was in coming up with a price.

Connie Fenyo:                   Well, you know, John, I did not read your book before I sold it. But what I did do is what the same thing as your character Alex did in his … Where he wrote down the price on a piece of paper and he stuck it in an envelope. When I bought that company, I did the same thing. I wrote down-

John Warrillow:                 Did you really? Wow, that’s great.

Connie Fenyo:                   I did, seriously. I did. And that, it wasn’t really scientific, but that’s the price that I thought, “Okay, that is when I exit. That will be my selling price.”

John Warrillow:                 Okay, and so, what was the number on the piece of paper? And again, I know you can’t tell me the number, but I’d be curious to know, was it 2x what you bought it for, 1.5 times what you bought it for, 3 times what you bought it for?

Connie Fenyo:                   Well, the multiple of EBIDTA was between 5 and 10. And it was a strategic-

John Warrillow:                 When you sold it.

Connie Fenyo:                   When I sold it. And it was a strategic buyer. All three suitors were strategic buyers. And of course, selling to strategic buyers is much better than just looking at a value investor as to what it’s worth on the books. So that was, that worked out well.

John Warrillow:                 Go back to 2008 for a second. I love this idea that you wrote down your eventual selling price. What was your thinking-

Connie Fenyo:                   I did, I talked to the CEO. I talked to the CEO of the company I bought it from, he said, “You’re crazy,” because we were good friends. He said, “You’re crazy, you’re never going to get that.”

Connie Fenyo:                   I said, “We’ll see.”

John Warrillow:                 Okay. So you’re not going to tell me how much bigger it was than your original buying price.

Connie Fenyo:                   I can’t … You’re such a good interviewer, John, but no, I’m sorry, I can’t do that. But I can share with you-

John Warrillow:                 I’m doing my job.

Connie Fenyo:                   It was a fair price, it was a good price. The company has gone on to acquire other businesses and it’s just gone on to perform well. That space that we built is really carrying it forward.

John Warrillow:                 Fantastic. So, let’s get back to the deal itself. The second suitor, you signed a letter of intent, which I’m assuming, correct me if I’m wrong, had what the industry guys call a no-shop clause, meaning you couldn’t negotiate with the third suitor when they came along.

Connie Fenyo:                   That’s right. I was locked in. I knew the business, and I had gone through buying companies and I had my idea about selling price. I just didn’t realize how much I really didn’t know at the time. If I think about it, I really should have engaged the assistance of an M&A broker or someone that’s done this. It makes sense, if you want to do something, speak to someone who’s done it before and done it successfully. Learn from them, kind of the principle I’ve applied in my whole life, except when I sold business.

John Warrillow:                 Well, that’s why we do this show, to share some of these lessons learned and so forth, so I appreciate you sharing it with candor.

John Warrillow:                 Did the third suitor give you any indication of what they were willing to offer? Did it get that far with them?

Connie Fenyo:                   Yeah, yeah, it did.

John Warrillow:                 And did they share that they would pay more?

Connie Fenyo:                   I probably could have got more, I probably could have. But I was locked in, negotiations had started. I wasn’t really in a position … I had the price that I wanted, and I thought, “Really? Do I want to break this off? Do I want to have to start all over again?”

Connie Fenyo:                   I mean, I had my envelope price, and I knew that this company, the company that I was dealing with, I knew that they would invest in technology. I knew that they would make it a … They would continue to grow it and I know that they would make it a stronger company. So that was entertaining. It was an entertaining thought, but I really looked at it and thought, “You know what, I’m sure third company, company C could have done the same thing,” but that would have been starting all over again. It would have been a gamble. It wasn’t really a for sure thing, it was a nice discussion, it was a lot of interest. I’m sure we could have continued, but it made sense to continue the discussions with who I was already in discussions with. It made sense, I knew what they were all about, and I knew the company would be a stronger company after I sold it. So I stayed with suitor two.

John Warrillow:                 What did the acquiring company see in Dye & Durham? What was the strategic fit that made it make sense for them?

Connie Fenyo:                   Well, they bought the company and they kept the name. If you look at what our most was, our most was brand. Brand, brand, brand. The average person would not be aware of who Dye & Durham corporation is, but speak to any lawyer, any law firm, anywhere across Canada, and we’ve been there since the beginning. Dye & Durham has been a staple of the legal industry for more than 150 years. It’s definitely brand, brand, brand. We were the leading supplier in BC, and we were a premium company. We had excellent, excellent staff. I mean, our employees, like I said earlier, many of them had been with the company 25 years or more. Our customers, our customer relationships, many of these, our employees and our clients, they grew up together. And we had probably the most comprehensive line-up of services. We were the one-stop shop for any legal firm. And that’s worth something.

Connie Fenyo:                   If you’re trying to break into the legal industry and you don’t have any relationships, you don’t have any history, or you have a product that it’s got to be, you’ve got to get buy-in … We work with most legal associations across Canada personally. We had very long-term government contracts for direct access to their data. You try and negotiate a contract like that from scratch, good luck. When trying to build that kind of a client base, yeah, good luck. But if you’re already providing some legal services, this is just a natural, natural fit.

John Warrillow:                 The acquirer, of course, was OneMove Technologies. Maybe can you describe what they do? Like, so people understand why they were interested in you guys?

Connie Fenyo:                   Well, they had a conveyancing division, they had a conveyancing company-

John Warrillow:                 What does conveyancing mean? That’s a word I don’t know, Connie. What does conveyancing mean?

Connie Fenyo:                   Okay, well, when you are buying and selling properties and you have to look at title, you have to inspect and register documents, plans at the land title office, register your mortgage. They have a software that can do all of that. So they were very, very strong in the real estate, online real estate solutions, providing that to law firm customers who would use that in dealing with their customers. So, notaries would use that service as well as lawyers would use that service. And what our line-up did is it just rounded it all out. So if you were dealing with a real estate practice in a busy law firm, this now means you could do business with the corporate area , you could do business with the corporate and commercial, you could do business with the civil litigators, you could do business with … As well as the real estate group. So it just helps you round out your reach. It was a very strong reach into the law firm.

John Warrillow:                 And how much crossover was there between OneMove, their customer base, the law firms that use OneMove and the law firms that use Dye & Durham? Was there a lot of overlap, or were they really separate customer bases?

Connie Fenyo:                   Very similar. A lot of our customers, I mean, we were the largest, so many of Dye & Durham’s clients, many of OneMove’s clients were already Dye & Durham clients.

John Warrillow:                 So for OneMove, it wasn’t necessarily that they were acquiring a lot of new customers, but they could offer new services to their existing customers.

Connie Fenyo:                   Exactly. They could offer new services, they could put their product line into this customer base. It was a wonderful, extensive customer base and they could grow it.

John Warrillow:                 And you mentioned earlier that, you kind of implied that it was a longer process than you thought when originally, the CEO said, “What’s your number, what’s your price, what’s your envelope number?”

John Warrillow:                 And you said it, and they said, “Okay, let’s go.”

John Warrillow:                 You suggested, I think, if I’m reading between the lines, that you thought the deal was done by that point, but it took a lot longer. Maybe describe … Did I interpret that correctly, that you misjudged how long it would take to actually get a deal done?

Connie Fenyo:                   Oh, John. Yeah, you really … You interpreted that right, you hit the nail right on the head. For anyone listening, the price and the letter of intent is the beginning. When we met with the company, the acquiring company, there was me and I brought my chief financial officer along with me. We walked into a room full of people. They had their brokers to conduct their due diligence as well as several members from their executive team, and there was me and there was my CFO. The sheer volume of due diligence took months. And there comes a point where enough due diligence is enough due diligence. In fact, twice, I think, I would have been ready to walk away from the deal. It was just that much, just the terms, all kinds of clauses that you just don’t even think about. You know, taxes, how long you want to be responsible for … There’s just …

Connie Fenyo:                   I mean, when the deal was finally done, I walked into the boardroom of my lawyer who was doing the deal for me and there was piles and piles and piles of papers all around the boardroom table that actually comprised the deal. I guess because we had had most of our clients we had contracts with, every single contract had to be vetted. All of the deals we had with the government, everything had to be examined from head to toe, A to Z, I’s dotted, T’s crossed. It was a full-time job, on top of the full-time job I had of running the company. It’s easy to let the company slip when you’re so caught up in running the, in completing the due diligence. And they had an army, and I had my CFO. And the manager of my real estate division, he acted as a legal counsel and ran the real estate division for me. So there was the three of us working until the wee hours of the morning, during the week, on weekends, trying to satisfy the due diligence requirements of the acquiring company.

Connie Fenyo:                   I had thought that they knew the company, I had thought they were familiar with the company, I thought the cursory documents we provided would be satisfactory. And my goodness, no. No, no, no, no, no, no, no. I just found their appetite insatiable for wanting to examine every nook and cranny of the business. And good for them. I mean, if I ever buy a business again, I will probably use the same company they used to conduct their due diligence, because my goodness, they went into everything.

John Warrillow:                 And you mentioned there was, twice, there were two times during that period where you got so exhausted, frustrated, whatever the right word is, that you thought about walking away.

Connie Fenyo:                   Yes, that’s right.

John Warrillow:                 What did you do in those moments? Who kind of talked you off the ledge?

Connie Fenyo:                   Well, into the process, I contracted BK Capital, and they are M&A advisors. Mike Kuiack was fantastic. He really went to the other side and really said, “Listen, how much is enough?”

Connie Fenyo:                   And sometimes it just needs saying no. I mean, no. “That’s enough now. I mean, no. I’m not going to look any further. You should have what is required already,” so I had hired Mike and Alex over at BK Capital, and if I had to do this again, I would have engaged them right from the very beginning. Same thing with my lawyers, Clark Wilson. I used Don Sihota over at Clark Wilson, and Prathiba Sharma. What a dynamic duo they are, and highly recommend them for any deal anyone is considering. But I would have engaged them right from the letter of intent. I had signed some clauses in that letter of intent that I wish I didn’t. I think I was too fixated on the price, and that sort of led me away from looking at all of the details, which I didn’t think were very innocuous. I thought it was fine, I mean, I had read thousands of contracts in the business that I was in, and should have engaged them right from the start.

John Warrillow:                 What were the terms that you wish you hadn’t signed?

Connie Fenyo:                   I don’t know if I can get into all of that, but you know, freezing up your cash immediately. That’s something that I don’t think I would have agreed to. There was a number of other clauses, and I really don’t think I can get into that with the confidentiality agreement that I have in place.

John Warrillow:                 Yeah, I know, that’s fine. If you had a young entrepreneur who was going through their first exit and they were reviewing their first letter of intent, so it’s not a share purchase agreement, it really is at that LOI stage … What advice would you give her or him as they were sort of reading through that letter of intent? What would you tell them to look for or evaluate?

Connie Fenyo:                   The first thing I would implore them to do is get a good team on your side. Don’t sign anything or agree to anything until you’ve had your team review it. The slightest word change can legally change the meaning of an entire concept that you think you agreed to that you haven’t. So I would definitely get yourself a great lawyer, get yourself a great accountant, and get yourself a great M&A advisor. Get a good team, go through it, I mean, there’s probably clauses you might want to add to the letter of intent, so it doesn’t become such a contentious issue when you’re actually getting into the drafting of the purchase and sale agreement.

John Warrillow:                 Like what? What might you add to the letter of intent?

Connie Fenyo:                   Well, it could be anything. It could be a provision of royalties, it could be how long the company plans on keeping you. You may be thinking you’re exiting in a year, they may be thinking you’re exiting in five years. It could be how they’ll go about the transition, how things will be communicated. It’s really imperative that there’s a communication plan, and you may allude to that in your LOI. I mean, there’s a number of considerations that you might want to think of. You might want to think about the cash, do you need your cash right now? And if you do, don’t agree to freeze it up. If you’re thinking of, you’re in the middle of development in an item, you don’t want to freeze that, you want to continue. Or it may hinder your chances at a contract somewhere else. So there’s a number of items that that you should look for. It’s unique business to business, but if you have yourself a good team, they’ll know what to look out for for you, and they’re on your side. They’re there for you.

John Warrillow:                 Well said, indeed. I’d never heard of this freezing cash business. Is that when the company, the transaction is executed, that there are some deals where literally the working capital in the bank is … Or is it that there is a freeze on cash at the LOI stage, before the share purchase agreement transaction?

Connie Fenyo:                   Well, sometimes there’s a freeze on what you can actually take out. So if you’re paying yourself by dividend and not salary, and you’ve agreed that you’re not going to take any cash out, I mean, you personally are going to be not able to function very well. So you need to seriously look at what the implications are. You may think it means something, but your assumptions are always only an assumption, so get someone who understands what it means in legal terms and have them explain it to you in simple language.

John Warrillow:                 Yeah. All business owners think of course their retained earnings are like their money. And all buyers think that retained earnings are in fact part of what they’re purchasing.

Connie Fenyo:                   You got it. Yeah, you got it. You’re right.

John Warrillow:                 That’s important, they’ve got to work through. Interesting.

Connie Fenyo:                   Yeah, for sure.

John Warrillow:                 Connie, I just think this story is really, really unique, and I’m grateful for you sharing it. What have you bought yourself? After this, you got your number on the envelope. Did you buy yourself a trophy? Are you driving around in a, I don’t know, a Rolls Royce or something like that, across the streets of Vancouver? What trophy did you buy yourself to celebrate this win?

Connie Fenyo:                   Yeah, no, I’m not driving a Rolls Royce. But what I did do is, on my list, and I’ve had a list since I was 20 years old of what I want for myself spiritually, what I want for myself materialistically, physically, intellectually, community-wise, and very, very goal-oriented since I was a young girl. But one of the things that I didn’t get a chance to do was get over to India. So when the deal was done, I agreed to stay on for a period of time after that, but after we did the deal, I needed a break. I mean, that intense due diligence process just about killed me in terms of sheer exhaustion. And this is after years of exhaustion, caring for a very sick husband and running a significant size business. I had obligations to employees, I had obligations to stakeholders. It was being on for years and years and years, and I needed to switch off. So I ended up taking a trip and I spent a month over in India, and it was probably the best thing I could have done.

John Warrillow:                 Wow, fantastic. Did you travel all around India?

Connie Fenyo:                   Yeah, I went to an ashram, I got pretty heavily involved in yoga, I went to see the different sites, I volunteered a bit while I was there. Yeah, a month is not enough time, ever, by the way. I thought it would be enough time, because I had only ever taken a week at a time, maximum, while I ran the company. So I thought a month would be forever, but it went by in a heartbeat.

John Warrillow:                 How has your emotional state been now that the deal is sort of in the rear view mirror and you’ve had a chance to sort of reflect? How would you characterize your emotional sort of well-being about that today, with some water under the bridge?

Connie Fenyo:                   Well, every owner coming in has their own ideas about what they want to do with the company, and I was very sorry to see several people no longer with the company after I left. I felt this tremendous sense of obligation to these people who have helped me build this business, and it was very, very difficult for me to see them go after I had left. That was emotionally a very difficult, difficult thing for me. But in terms of the company itself, I know it’s a strong company. I know that the owners have gone on to acquire other similar businesses. I know that they’ve invested into technology, and I know that they’re moving forward.

Connie Fenyo:                   So in terms of taking that company and growing it, which I had hoped to do, I know that they’re doing. So that is something I know I couldn’t have done myself. It’s good to see that growth. I’m now at a point where the company is the company, it’s not part of my life any more, and that’s been a big adjustment. That company was my life for the longest time.

John Warrillow:                 Well said. What was the reaction of your long-term employees to the news that you had sold the company?

Connie Fenyo:                   Well, two employees knew right away, because I needed them to help me, just with the sheer volume of due diligence. So my chief financial officer and my in-house legal counsel, they were incredibly supportive. And the team was supportive. We were a family environment. Although we had quite a few employees, I can certainly say I knew them by name. I knew their families, they had been with the company a long time, and I know that it was hard. It was hard for me to tell them, but they understood why I had to sell. If I had continued to be there without that investment, I don’t know where the company would be today. So it was bittersweet.

John Warrillow:                 Did they know your personal story, the amount of risk you had taken to purchase the company, the health and ultimate passing of your husband? Did they know any of that?

Connie Fenyo:                   No. Well, they didn’t know what I had put on the line for that company. They didn’t know I had taken cuts. I didn’t share that with them. But they did know that my husband was really sick. I mean, I had been at the office all the time before, and I was spending periods of time away. And I had regular town hall meetings, I believed in transparency long before it became fashionable. We would have regular town hall meetings, and I would share with them what was going on. And they were behind me, they supported me. I was very fortunate, I was very lucky.

John Warrillow:                 This is a sort of a Hollywood movie kind of ending to the story. I’m so grateful that you shared it with us and that it worked out as well as it did, just given the tremendous risk you took and the roller coaster you went on. So, I appreciate your sharing it.

Connie Fenyo:                   Yeah, it’s been my pleasure, John. Really, it’s been great talking to you, and I hope your listeners get something out of this. If nothing else-

John Warrillow:                 Oh, I know they will.

Connie Fenyo:                   Get yourself a good team.

John Warrillow:                 Yeah, you got that, you’ve nailed that for sure.

John Warrillow:                 Connie, what’s the best way … I don’t know if you accept LinkedIn connections. If people want to reach out to you, is there a website you’d want them to go to, or do you want them to go to LinkedIn and say hi there?

Connie Fenyo:                   For now, sure. Just go to LinkedIn.

John Warrillow:                 And you are, on LinkedIn, I believe it’s Constance Fenyo. Is that correct?

Connie Fenyo:                   That’s right, that’s right.

John Warrillow:                 Constance, and it’s Fenyo, F-E-N-Y-O.

Connie Fenyo:                   That’s right. F like Frank, E-N-Y-O. My mother thought the name sounded regal.

John Warrillow:                 Well, that it does. Connie Fenyo, thanks for joining us.

Connie Fenyo:                   Okay, John. Thanks so much.


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