The Business Brokerage of Paper Ya – Granville Island

PROJECT  OVERVIEW

 

Paper-Ya was established in 1986 as a retail stationary & gift store specializing in a curated selection of contemporary products that reflect trending lifestyles. The founders Denise and Sharon, were two artists who became partners and have owned the company since the beginning. The goal was to create a unique shopping experience for all that visited the shop and they decided the foundation of that experience would be reliant on paper. Not just any paper but handmade paper from all over the world. Realizing that expanding their product line would increase their business they used their extensive artistic talent to bring in a wide array of unique and ever changing merchandise. Paper-Ya is located in the Net loft building in Granville Island.

Over the past 28 years, the owners had helped the business adapt and grow, successfully remaining both current and trend setting. Both Annual Revenues and Net Income of the business were at the highest levels. Sales per Sq FT were the 2nd highest in Granville Island.

In 2016, the original owners of Paper Ya, Denise and Sharon finally decided that it is finally time to retire.  After interviewing several commercial brokers, the owners hired Klein Group, Royal LePage Commercial to help them find a new owner.

 

THE  CHALLENGES

Challenging retail trends and strict landlord requirements proved challenging.

The stationary and paper products industry was in decline. Many franchise and chain stores of in the industry had closed. Although the financials of the business were very strong and the reputation of the store was strongly admired, both buyers and banks had doubts about the future demand of the industry and were somewhat conservative in their valuation of the business.

The original owners were the brain behind the business, and over a 3-decade period had developed a distinctive and unique product offering which had made the store a favourite with customers. Many buyers wondered if they could not only successfully continue the procurement strategy but be able to adapt to new trends with time as the owners had done in their time of ownership.

Granville Island’s approval criteria included requiring the new owners to have local experience, similar retail type work/ownership experience, non-chain/non franchise ownership, and to be hands on and not investors. These criteria significantly decreased the potential buyer pool.

The asking price of the business, including the value of inventory, exceeded $1.1M. Although the financials supported the valuation, the price range was out of reach for the majority of hands on buyers with local retail experience. Most business owners who could afford a $1M+ business, were of the investor type profile and many had or wanted to have multiple locations/stores.

Klein Group RLP Commercial not only had to source a hands-on buyer with a proven record in local retail management/ownership who had a very strong financial power, but one who also had an artistic background, vision, and passion. This created and extremely narrow and unique pool of buyers to target.

Those who had the funds, were not typically artists with similar business type experience. Those buyers who came with passion for the store and an artistic background either did not have the retail management/ ownership background or did not have sufficient financial backing or both.

In the initial phase of marketing the store, one of the buyer who agreed to terms with seller, was approved for the funds, and provided a relatively acceptable retail ownership/mgt background and had some artistic passion/background was rejected by landlord based on not being local or having sufficient local retail experience and not having similar enough use type related background.

 

SOLUTIONS AND OUTCOMES

 

In order to provide the solution, our brokerage had to re-visit and recreate the marketing plan and develop and develop a unique approach to target and qualify the distinctive buyer profile. This was developed through:

• Additional discussion and time with CMHC’s leasing department and the Paper Ya owners to better understand the required tenant criteria and the ideal buyer profile
• Redefining the buyer screening and qualification process which included creating a Buyer’s Application that incorporated the landlord’s criteria and qualified the buyer financially. 
• Redefining the target marketing strategy and process
• Increasing networking and direct marketing to
  • existing retail owners in GVRD with businesses generating between $700,000 and $1.5M annual revenues
  • Local small business consultants
  • Small business bank/financial advisors
  • BDC
  • Local BIAs
• Using specific social media advertising targeting at small business retailers with a passion for arts
• Revisiting the target marketing of existing similar type business owners
• New Buyer Screening for the confidential sale of the Paper Ya business is summarized as below:
  • Execution of the Non- Disclosure Agreement
  • Submission and execution of the Buyer’s application Owner 
  • Qualifying criteria:
    • operators/hands on
    • No investors
    • Retail related experience (we ask them to provide detail on their role in previous businesses or related employment) 
    • Passion for Granville Island
    • Passion for Paper Ya
    • Creativity/artistic side
    • Business Structure with family composition
    • Right personality: As per Denise and Sharyn’s advice. Creative, people, non-conservative, passionate, …)
    • Verified financial capacity
  • Profile of applicants who qualified as per the above were presented to Paper Ya owners. Their opinion and criteria key as they had created and owned the business for 29 years and had an excellent understanding of Granville Island being one of the original retail tenants. 
• Including the landlord in vetting of the last 2 candidates before finalizing commercial terms between the buyer and seller.

THE  RESULTS

 

Over time, the new marketing plan brought forward seven potential candidates. These candidates were carefully interviewed and qualified. 

Klein Group was able to effectively finalize negotiations with the final buyer and work with CMHC’s leasing department to finalize the approval by the landlord. This final successful candidate, came though the small business financial advisor network and marketing campaign, and brought extensive local retail experience, with hands on family run operations, and with good experience in fashion retail management as well as strong background in arts. The buyer was fully pre-approved by the bank.