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Patrick Khouzam is Senior Vice-President and Director at MNP. While he may not be an accountant, this finance and management graduate of HEC Montréal plays a vital role.
“My job is to guide companies through the divestiture or acquisition process from start to finish,” he explains. “And when it comes to divestitures, to maintain the company’s equity value throughout the process.”
In recent years, Mr. Khouzam has worked with clients ranging from eyewear retailers to media & communication agencies, telecoms and Food & Beverage companies. Regardless of the industry, however, the transaction process and its various components remain the same.
Mr. Khouzam starts by conducting a highly detailed due diligence analysis of the state of the company’s business to avoid any unpleasant surprises. “No one wants to find a skeleton in a company’s closet in the middle of negotiations,” states the 42-year-old Senior Vice-President.
Putting more time and effort into this preliminary diligence ensures that the rest of the process goes smoothly. “It prevents any headaches later on” when fatigue starts settling in among the various parties, explains Mr. Khouzam, who is accustomed to spending long hours hammering out deals in boardrooms. His ultimate objective is, after all, to preserve a company’s value. “And if I’m able to do this when I’m best positioned to do so, at the start of the process, then so much the better.”
Mr. Khouzam shares that his work is not getting easier, especially as time goes on. Transactions are much more complex today than when he started his career, and this complexity has accelerated within the last five years. “Everything is moving faster except due diligence, which takes more time now than ever”, he notes.
Legal documentation has become increasingly complex. Something that took 20 pages years ago takes 80 pages today. Companies face more intricate issues, and the supply chain has become globalized. The clauses and conditions requiring study are many, and all risks must be considered. Anything can go wrong during due diligence, hence the importance of sound legal support. “When it comes down to it, there can be no transaction without a strong legal team,” as he puts it.
According to Mr. Khouzam, lawyers ask the right questions and ensure that their clients have covered all the bases. Over the years, he has fostered relationships with many legal partners, which has helped him to see the importance of working with experts specializing in transaction law. “Business owners build relationships of trust with their corporate counsel, sometimes over many years, and I respect that,” he says. “But is this the right person to conduct the transaction?” He believes that people need to stick to what they know.
For guidance through the complex and delicate process of selling a company, this may mean convincing clients to choose a different lawyer from the one they have always worked with. This is always an emotional time “where it ultimately comes down to one person against another.”
Mr. Khouzam has seen tears shed when the time comes to sign the final papers. “I often say that I spend my life in my clients’ kitchens rather than their boardrooms. In other words, I get involved in their lives, their day-to-day realities. There may be family members or partners in the picture, all the other people around them. Their reasons for selling are not always simple or even clear. Entrepreneurs have a social conscience. They tell me, ‘I’ve got 200 families depending on me,’ which makes it even more important to get things right.”
The situation becomes increasingly complex when it involves assets in distress or companies at a crossroad or officially under bankruptcy protection. Lawyers with expertise in restructuring become essential for what comes next. “The level of legal complexity is very high in these cases.”
Patrick Khouzam may spend months or even years building relationships with clients who have no particular need for his services at the time. “Our challenge is to continuously strive to maintain these relationships through good times and bad,” he concludes.
To learn how MNP can help you, contact
[email protected], or your local MNP Business Advisor.
This article was originally published in French on
Related Topics:Selling a Business; Due Diligence; Lawyers
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