Due diligence had been completed, the purchase agreement had been drafted, and although Ian Henson..

Due diligence had been completed, the purchase agreement had been drafted, and although Ian Henson was certain that this was a risk worth taking, he also knew that signing the contract in front of him would be the biggest financial decision of his life. For over a year, Henson had been in negotiations with Natalie Peace to purchase and take over management of three Booster Juice franchise locations in Kamloops, British Columbia, Canada. The franchises had a proven track record of success in the Kamloops market; they had the reputation of being well run, and had a history of sales and profit

»Due diligence had been completed, the purchase agreement had been drafted, and although Ian Henson was certain that this was a risk worth taking, he also knew that signing the contract in front of him would be the biggest financial decision of his life. For over a year, Henson had been in negotiations with Natalie Peace to purchase and take over management of three Booster Juice franchise locations in Kamloops, British Columbia, Canada. The franchises had a proven track record of success in the Kamloops market; they had the reputation of being well run, and had a history of sales and profit growth. But he saw several major problems ahead. This purchase would represent a major leadership change at the company. Henson knew that for any company, a change at the top would bring risk, but there were a few wrinkles to this deal that made it unusually challenging. The first issue was demographic in nature. The median age of the employee group at Booster Juice Kamloops was 18, and over 70 percent of the employees were female. For the majority of employees the position at Booster Juice had been their first job, and most had only known one boss: Natalie Peace. Henson knew that the employees were= particularly devoted to Peace, who in her late 20s was over ten years his junior, and represented an aspirational figure to many of the company’s workers. He was aware that his personality and leadership style would represent a major change to the employee group; he wondered what leadership traits would be most helpful in managing this transition. Adding to the stress of the purchase was Henson’s financing. Where Peace had financed her purchase and expansion with equity and company profits, Henson would be financing his purchase almost exclusively through debt – both borrowing from friends and relatives, and securing a business loan through a local bank. As he stated “I went to 5 banks and asked several investors. Investors wanted too high a percentage in return, and BDC [Business Development Bank of Canada] wanted to charge too much interest.” “Other banks said no, and a government guaranteed loan was only available on an asset purchase and we did a share purchase. CWB [Canadian Western Bank] was the only one that made it work, then Natalie did vendor financing to assist in making the final deal work along with CWB.” Henson would be fully leveraged when the deal went through, and cost cutting would need to be an immediate priority. Ian Henson had big shoes to fill. He was replacing a charismatic and well respected leader and due to his financing arrangements, he had a mandate to cut costs. Despite the potential pitfalls, Henson was optimistic – he felt lucky to be in the position to take over a thriving business – but he knew the way the transition was managed would be crucial to his success. Ian Henson

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