What to do when selling your business
February 13, 2018

Should’ve called sooner

I often joke that Catchfire’s motto should be “You should’ve called sooner.” I’m not really sure what causes people to wait so long. Human nature? Inaccurate information? An unfortunate event? Whatever the reason, they often wait just a little longer than they should.

Last year, I was introduced to a client that needed to raise $1,000,000 to purchase equipment that would allow them to scale their business. As usual, there were some operational challenges that had brought them to this point. In my experience, I’ve found that money trouble is often a symptom rather than the actual problem. It soon became clear that this was the case.

The first client meeting took place on a sunny Thursday afternoon. As we were delving into the company background, high-level financial summary, strategic plan, and other basic documents, we began to discuss the timeline. The client then informed me that they needed the money by the end of the month. Thinking that they meant in five weeks (as in the end of the upcoming month), I said, ‘That’s really tight but I think we can help.” That’s when the client corrected me. They had five days, not five weeks. We pride ourselves on being great at what we do but that was impossible. Again, the phrase rang in my head, “Should’ve called sooner!”

Another time, a client called to say that they needed to raise $5,000,000 in 30 days or they were toast. They made an outstanding product that was in high demand. They also had no direct competitors. The problem was their timing and level of desperation. Most financiers would have figured it out quickly. After doing so they would have either charged exorbitant rates or waited until day 31 to initiate an even more uncomfortable conversation. We proposed a small equity round to raise money from existing shareholders.

That money would be used to deploy a restructuring team that could give the company some breathing room so it could demonstrate improved performance before pursuing additional financing. (The company had an exceptional tech team but needed a professional management team.) By the time that they came to us, the shareholders were already financially and emotionally exhausted. Well past their investment limits and comfort levels, many of the investors faced a tough decision: Minimize their personal loses or risk even more money. As I was saying, “Should’ve called sooner.”

We get calls like this every month. Unfortunately, we often have to be the bearers of bad news. Don’t get me wrong, we specialize in finding funding from many sources and are proud of our uniquely creative approach. That said, the better the conditions (like timing), the more options we can create for you. The more options we have to work with, the better the deal we can secure.

Don’t be another “Should’ve called sooner.” If you want to chat about your financing or buying/selling needs, please contact us: info@catchfiregroup.ca. Remember, it pays to be proactive.

Regards,

Gary Brownstone,
President & CEO
gary@catchfiregroup.ca

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