Buying a Business – Would You Buy The Company You Work For?


When it came time to look at our business, I thought, well, why not? 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. 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.

Connie Fenyo

As an employee, would you ever turn around and buy the business you worked for?

When Connie Fenyo decided to buy a business, it was right in the heart of the Global Financial crisis in 2008. The business she bought was Dye & Durham where she held the role of Executive Vice President. Connie’s journey of transitioning from employee to business owner is fascinating. Not only did she buy the business at great personal risk using her entire life savings, she strategically grew the company over nine years, dragged it out of huge debt, and then sold it. For an extra twist, the price she received was exactly the amount she’d written down and put in an envelope years earlier when she bought the business.

How to raise $1.5M overnight

How did Connie come to be at the helm of one of Canada’s biggest legal support and services companies in the middle of an economic recession? To understand this we first need to look at how she raised the funds to buy the 200-employee firm. 

At the start Connie believed she had locked in a lending price with the banks, only to find that she needed to raise a lot more money! It was an extra $1.5-million on top of what the banks had lent her. She also needed it in a hurry in order for the deal to go through! This lead her to research other forms of financial lending which would allow entrepreneurs to buy a business in a hurry.

Angel Investors

This type of investment is also known as a private investor or seed investor. Affluent business people will lend capital to business owners in exchange for stock or ownership of the business.

Connie decided she did not want to share ownership of her business or have the strict demands of a return on investment. However, Angel Investors are often a great option for start-ups to source income. Due to this type of business’ high fail rate, Angel Investors are usually the only way to secure such funding. 

Subordinated Debt Financing

Also referred to as mezzanine financing, this type of loan is one of the highest-risk forms of debt. This type of loan is paid after all other corporate loans and debts have been repaid. It also offers some of the highest returns, with rates between 12 and 20 per cent per year. Because of this, companies generally use mezzanine financing to support certain projects or an acquisition and seek it out from a long term investor in the company.

In Connie’s case, she had her loan from the bank, but it wasn’t enough. She went to another credit institution for subordinated debt financing, which meant that institution was second in line to the primary lender in case of borrowers default. Connie had to put down a personal guarantee, meaning she was risking everything she owned in order to buy.

Vendor Financing

Her last effort to raise the funds, was go back to the seller and ask for a personal loan which she’d pay back over a period of time. The seller agreed and lent her almost 40 percent of what she needed to acquire. 

What made Connie’s acquisition different than ‘an all-or-nothing Las Vegas Blackjack gamble’ was her belief in the company and where she could take it. She had a loyal and passionate workforce, a working knowledge of the threats and opportunities in the industry as well as a pre-existing relationship with stakeholders from her time as Executive Vice President. 

Prioritising the debt repayments in order to strategically drive growth

Now the proud owner, and massively in debt, Connie began building Dye & Durham. But she needed an aggressive plan to pay back what she owed. 

She did this by:

  1. Taking a cut from her salary. While she never mentioned this to her employees, Connie earned less as an owner than she did as an employee as a portion of her salary went towards repayments.
  2. She restructured how employees worked - while no employees or their salaries were cut, some were offered remote work, part or flex time at their wishes. It worked out better for the employees as well as the business’s bottom dollar.
  3. The business was streamlined to become more productive and profitable. Connie and her team analysed the business structures in place and created strategies to drive efficiency. Any additional profits were fed back into driving down the debt. 
  4. Ensuring the highest, mezzanine debt was paid back first. Any additional income was put towards clearing that debt so that once it was settled funds could be more quickly  allocated towards growth.

As the debt wore down, her gamble began to pay off. 

I guess you can say it was like taking a travel agency and making it into an”

Stabilise, Transition and Grow

Connie knew in order to drive growth, she’d have to focus on three key factors. Firstly, she would need to stabilise her debt, secondly the business would need a digital transformation taking it from paper-based to electronic. Finally Connie would need to work on scaling up. As the debt was paid down, the more resources were allocated to research and technology. 

The development team was very creative in their approaches. While developing software applications, Dye & Durham’s law firm partners were allowed free access to the software in exchange for help in making it a better and more marketable product. Due to her strong relationship with the stakeholders, it was an effective way to understand and develop solutions for their clients. 

What’s truly impressive was that Connie was able to grow the company by three to ten per cent annually despite having to cut product prices by 40 per cent. So not only did they have to make up for what they lost, but had to also profit on top of that, which they did. 

Knowing when to exit

Connie knew when she bought the business, she would exit it one day. What she wasn’t sure about was ‘when’ this would happen.

When the industry started shifting to a digital model, and even government organisations (who Dye & Durham competed directly with) began offering their services online, the company was faced with an ultimatum: If the business wanted continued growth, significant investments were required. Developing technology and transitioning the company into a legal software solutions provider would need to occur. There was no way Connie could afford to fund this growth, so she knew she had to sell. 

This, combined with personal factors and the death of her husband, were Connie’s triggers. 

While she hadn’t positioned the company for sale, Dye & Durham were a prime candidate to be acquired. Their advances in technology meant there was an established global due diligence division which expanded its reach across Canada and internationally. So while Connie couldn’t afford to invest further, another owner saw the profitability in those services.

In fact, three buyers came forward straight away. The challenge for Connie wasn’t in finding a buyer, but with the process that came next.

While she bought the business easily, selling it was another matter. She referred to it as a 'full-time job on top of her full-time job'. She found herself inexperienced in handling the rigours of the negotiations. 

In the end, after a lot of back and forth and litigation, she signed a letter of intent with acquirer #2, OneMove Technologies.

Connie’s biggest lesson for business owners looking to sell

Seek the advice of the experts. While Connie received the amount she wanted and is happy with her exit, she knows the outcome could have been different with an experienced team by her side. 

Her advice: “If you want to do something, speak to someone who’s done it before and done it successfully.”

If you would like to know more about how Exit Advisory group helps business owners like you, feel free to get in touch.

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