Recently, Simon Property Group, the biggest mall operator in the
United States announced a deal to partner with a Silicon Valley
start-up, Shopkick Inc. Shopkick is a company that has created
technology that will reach out to Smartphone-equipped shoppers. It
is one of many companies that have developed technology aiming to
perform similar types of functions. The technology is relatively
new and will become pervasive in the near term. Simon's
objective is to reward Smartphone-equipped shoppers for walking
into its shopping centers by sending discounts and promotions to
My reason for pointing out this business transaction is that it
is a little unusual. Typical sale transactions happen between an
investor and a seller of a business or between a strategic
purchaser and a seller. Usually the strategic purchaser is one in a
similar business or one that is either upstream or downstream in
the supply chain. There are generally operating synergies in the
The Simon Property Group deal falls outside of the usual because
Shopkick Inc. would likely be considered a provider of marketing or
technology to the mall operator. When I read about the transaction,
it strengthened my belief in a phrase that I use all the time;
"We don't know what we don't know."
In this case, it confirmed that the strategists looking for a
partner for the Silicon Valley firm did a great job in stretching
the boundaries of their search. They looked beyond the typical
strategic and financial buyers for one that has synergies because
they would be a significant user of the product.
Simon will begin using the product almost immediately and hopes
to roll it out to 100 of their 370 malls within months.
Most transactions involving small to medium-sized businesses
take place when either the owner contacts a competitor and opens up
sale discussions or when a strategic buyer targets competitors as a
method of gaining market share, reducing competition or gaining a
supply line. In those situations the seller often locks themselves
into single buyer negotiations without the benefit of knowing what
others might offer for the business if it was widely marketed.
Typically, business owners and managers are good at operating
their business. Directors of large enterprises understand that
selling a business requires different skills than those for running
a business and for that reason we read about investment bankers
being hired to sell many of the corporations that are household
names. Yet, when most owners of small to medium-sized businesses
decide to sell, they undertake the responsibility themselves.
Frequently, this results in a loss of concentration on the
business. In many cases, the owners of small to medium-sized
businesses do their best to emulate the business strategies of
large corporations but not when it comes to hiring investment
Statistics show that most business owners have up to 80% of
their wealth tied up in the value of their business and yet they
are willing to sell without trying to find out what they don't
know. What we don't know is what the Board or partnership or
individual is thinking as to how a business like yours would be a
great addition to their business or investment portfolio. Generally
there are always buyers for a good business; you just need to find
the right strategy to seek out the best buyer.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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