At 29, Brett Butler did something most people his age wouldn’t consider. He bought a machine shop.
It was September 2021, and the world was still in the grip of COVID-19. Masks were everywhere. Businesses were dealing with outbreaks, supply-chain disruptions and a level of uncertainty few had experienced before.
Butler was trying to close a deal with would make him the owner of Aaron Machine Shop, a Calgary-based machining business built over 25 years by Mohammed Koudmani and his wife Sheila.
Then Butler got COVID himself.
“I remember shaking my head, like, what am I doing?” he says.
He went ahead anyway.
Five years later, Butler has no regrets. His workforce has nearly doubled to more than 70 employees, production space expanded to more than 45,000 square feet and sales volume climbed to record levels.
“I think really what we want to do now is get better with what we have – to (become) the most efficient machine shop in Alberta,” says Butler, noting much of his focus over the past few years has been on refining processes, adding capacity and creating room for future growth.
In hindsight, the decision was not as much of a leap as it might sound. Butler had grown up around family businesses in Kelowna, B.C. He had also spent years working in finance, including five years at private equity firm TriWest Capital Partners where he gained experience buying, selling and growing companies.
Still, buying an established machining business without a background in machining came with plenty to learn.
“I didn’t even know how much I didn’t know about machining,” says Butler.
But Butler understood business. He knew how to navigate transactions and manage financials, as well as how to look at an established operation to identify room to improve.
Important to Butler was that the business already had customers, systems and people.
“I liked the customer base that Mohammed had built up over 25 years. There were some very deep relationships that he had built that I felt like I could build off of,” says Butler, who also credited the work that both Mohammed and Sheila spent in the years prior to the sale in building up a management team that could support an ownership transition.
“My experience in private equity and being around family businesses, it definitely channeled me toward buying something that was already successful and running. I really was looking for someone who was looking to transition.
“An existing business is a proven concept. So, for me, that was more attractive than just starting from scratch.”
Butler’s experience reflects a broader transition underway across Western Canada’s business community where a generation of business owners is approaching retirement in what has been dubbed the “silver tsunami.”
New research from the National Bank released this past summer reveals that nearly half of Western Canadian mid-market business owners expect to retire within the next 10 years. More than two-thirds plan to sell or transfer their business.
At the same time, there is growing interest among younger Canadians in becoming business owners. An RBC Small Business Poll released this fall found that two-thirds of Gen Z Canadians have considered owning a business, more than any other generation. Nearly half believe entrepreneurship is more accessible today than it was previously.
Jason Nagel is owner and operator of Three60 Wealth. His Calgary-based multi-family office helps owners of companies typically valued at or generating between $5 million and $50 million navigate the process of preparing for an exit.
Nagel says he is seeing more local business owners looking to sell, driven in part by retiring Boomers. Yet he says many underestimate how much preparation goes into a successful sale.
In some cases, that realization is the biggest “a-ha” moment for owners. The process is rarely as simple as putting a business on the market. While an actual sale typically takes nine to 12 months once a company is listed, Nagel says the preparation ideally begins at least five years in advance.
“In a perfect world, we’d start with them 10 years out,” he says, noting this helps owners avoid hitting their “pain line” – that is, the point where they have simply had enough.
“What we’re trying to do is get everything in a row for them to ultimately exit the business that they’ve spent their life building so that they can maximize what they’ve built.”
Many business owners, however, don’t know where to start that process.
“They’re surrounded by great advisors, but their job is not to help owners exit out of their business,” says Nagel.
The National Bank research notes that while awareness of succession planning is high in Western Canada, many business owners have only consulted, on average, one of the various advisors required to support in selling their business. More than one-third have not yet engaged any specific advisors to help guide a sale or transfer.
Nagel emphasizes that these owners need a dedicated guide – whether a business broker for smaller operations or M&A firm for larger ones – whose role is to co-ordinate all financial, tax and personal planning.
A dedicated advisor can co-ordinate the financial, tax and personal considerations involved in a sale, Nagel says, helping owners prepare for the transition and protect what matters to them.
In situations where a company has suffered operational setbacks, revenue losses or a lack of modernization, Nagel adds that these owners might also need to bring in consultants to fix processes, rebuild profitability and make the enterprise saleable before attempting to go to market.
“The only way that you’re going to really get through that is to work with somebody who’s been there before – who can take you by the hand and guide you,” says Nagel.
For Mohammed and Sheila, the idea of selling had been in the back of their minds for years. They had started talking about a potential exit with Nagel in 2017, but there was a problem.
“Mentally and physically, I wasn’t ready,” says Mohammed.
Still, the conversations continued, eventually leading him to bring in a business coach to help prepare Aaron Machine Shop for sale. The process included putting managers and lead hands in place and gradually taking himself out of the day-to-day operation.
Reflecting on the sale today, Mohammed says the decision also came down to recognizing when it was time to step away.
“Your body, your brain tells you when it’s time to walk away. And one morning I said, ‘Time to go’,” he says.
For Butler, he’s grateful for the opportunity Mohammed and Shelia gave him to take over a business with a strong foundation already in place.
He also says the experience of buying Aaron Machine Shop has changed how he sees the opportunity available to other young entrepreneurs considering business ownership.
“It’s fun working for yourself,” he says. “It’s really rewarding if you can be successful and grow a business. And you can give some of your best staff really good opportunities. You can go deeper with customers, and that’s really rewarding.”
“The whole experience, if you give it 100 per cent, can be an amazing one.”