Two Thunder Bay founders merged without either one buying the other

The situation

Nuwan and Marieke had known each other for almost fifteen years before they talked seriously about combining their companies. They had come up in the same corner of Thunder Bay's service economy at roughly the same time, Nuwan building a small delivery and courier operation after years of driving rideshare himself, and Marieke building a short-term rental turnover and cleaning business after years supervising the front desk at a hotel downtown. They were not friends exactly, but they were the kind of competitors who ran into each other at supplier events and industry mixers often enough to respect what the other had built.

Over the years, their businesses had started to overlap in ways that made a certain amount of sense together. Nuwan's drivers were often the ones delivering supplies to the properties Marieke's crews cleaned. Marieke's clients frequently asked whether Nuwan's company could also handle rush deliveries between turnovers. Neither business was large by big-city standards, together worth somewhere in the $3 to $8 million range, but both had grown steadily and both founders had reached a point where continuing to compete for the same small pool of local clients felt like wasted effort.

The idea of a merger came up first as a joke at one of those mixers, and then, over several months, as something they were both quietly taking seriously. Neither wanted to sell to the other. Both had built something they were proud of, and a straightforward acquisition, one company absorbing the other, would have meant one of them stepping back from control of the combined business in a way neither was willing to accept. What they wanted instead was a merger of equals, where both would hold meaningful ownership in one combined company going forward, run jointly, with Nuwan's business partner Anneke staying on to help lead operations.

Nuwan came to us once the two of them had agreed in principle to merge but before they had settled on how the ownership split should actually be calculated. That, it turned out, was the hard part. A merger of equals depends on both sides agreeing that the exchange ratio, the formula that decides how much of the combined company each side's owners end up holding, is genuinely fair. Getting to that number meant putting a defensible value on both businesses, and one of the two had a problem the other did not.

The risk we had to size

Marieke's business had grown out of informal beginnings. She had started cleaning a handful of short-term rentals herself, kept records in whatever notebook or spreadsheet was handy at the time, and had gone through two different bookkeeping systems in her first four years before settling into something more consistent. The early financial records, roughly the first three years of the business, were incomplete in places and missing entirely in others. Bank statements existed, but the underlying invoices, contracts, and expense records that would normally let an accountant reconstruct exactly how the business had performed in those years simply did not.

This mattered because the exchange ratio the two sides were negotiating depended heavily on each company's demonstrated growth trajectory, not just its current revenue. Nuwan's company had clean, complete records going back to its founding, prepared by a bookkeeper he had used consistently for years. Marieke's growth story was real, her current revenue and margins were solid and verifiable, but the multi-year trend that would normally support a higher valuation for sustained growth could not be fully documented for the early period. Without that documentation, a conservative approach would have undervalued what Marieke had actually built, while accepting her account of the early years without verification would have exposed Nuwan to a risk he had not agreed to take on.

Neither founder wanted the missing records to become a source of resentment once the ink was dry. Marieke was upfront about the gap from the first conversation, which mattered to how we approached it, but being upfront about a problem does not make the problem disappear. If the combined company's ownership split turned out, a year or two later, to have been based on an inflated picture of Marieke's early growth, Nuwan and Anneke would have grounds to feel the deal had been unfair from the start, and a merger of equals that starts with one side feeling shortchanged tends not to stay equal for long.

The practical question was how to set a fair exchange ratio when part of the information needed to set it definitively did not exist and could not be fully recreated, only reasonably estimated. That is a different problem from a straightforward valuation dispute, where both sides simply disagree about how to interpret numbers they both have. Here, one side of the equation had a real, honest gap, and the deal structure had to account for that gap without punishing either founder for it.

What we did

1. Brought in a forensic accountant to reconstruct what could be reconstructed from bank statements, tax filings, and whatever partial records existed, cross-referencing individual deposits against the categories of client Marieke could still identify from memory and from surviving email correspondence with suppliers and property managers. The work took several weeks and produced a usable, if imperfect, picture of the early years that neither founder could have assembled alone.
2. Set a confidence range instead of a single number for the years with incomplete records, presenting the reconstructed figures as a low, middle, and high estimate rather than pretending to a precision the underlying evidence could not support. Treating a rough estimate as an exact figure would have created a false sense of certainty for whichever side the guess happened to favour, and both founders would eventually have noticed.
3. Proposed a collar mechanism for the exchange ratio rather than insisting on a single fixed split at closing, so that the final ownership percentages would adjust within a defined band based on the combined company's actual, verifiable performance over its first eighteen months. This let real, jointly measured results answer the valuation question the missing early records could not answer with confidence upfront.
4. Negotiated the width of the collar directly with Marieke's advisor over several sessions spread across roughly three weeks, since a collar that was too narrow would not meaningfully address the underlying uncertainty at all, while one that was too wide would leave both founders unable to plan around their eventual ownership stake for an uncomfortably long stretch of time. Landing on a band both sides could accept took longer than either founder expected going in.
5. Built clear, objective performance metrics into the collar, tied to revenue and margin figures that both sides' accountants would calculate the same way from the combined company's own go-forward records, using a shared, agreed accounting methodology fixed in the agreement itself. This meant the eventual adjustment could not become its own fresh source of dispute between two people who still needed to run a business together.
6. Drafted the merger agreement with a documented explanation of the reconstruction methodology attached as a schedule, setting out exactly which source documents existed, which had to be estimated, and how the estimate was derived, so that if either founder or a future investor ever questioned the early figures, the reasoning was preserved rather than left to memory or goodwill. That schedule became the reference point both accountants used when the collar was eventually measured.
7. Ran the numbers past both founders together, not separately, in a joint session where the accountant walked through exactly how the estimate had been built and answered questions from both sides in the same room. A merger of equals depends on both sides trusting the process as much as the outcome, and that trust is considerably easier to build together than through two lawyers relaying explanations back and forth secondhand.

The outcome

The merger closed with an initial exchange ratio based on the middle of the reconstructed estimate range, subject to the collar adjusting within a fixed band once eighteen months of combined results were in and both accountants had a chance to review them jointly. Both founders signed off on the structure without the friction that had seemed genuinely possible a few weeks earlier, when the size of the missing-records gap first became clear to both sides at once and each briefly wondered what the other might argue for.

When the eighteen-month mark arrived, the combined company's actual performance landed close enough to the middle estimate that the collar triggered only a small adjustment, a few percentage points shifted in Marieke's favour, reflecting that her early growth had, in fact, been slightly understated by the conservative end of the original reconstruction. Both founders described the adjustment as fair rather than as a win for one side or a loss for the other, which was precisely the outcome the collar mechanism had been designed to produce from the start.

Nuwan told us afterward that the part of the process that mattered most was not the final number but the fact that neither he nor Marieke ever felt the other was trying to take advantage of the gap in the records to gain leverage. Anneke, who stayed on to help lead the combined operations team, said the same steady handling had made it easier to bring the two companies' staff together afterward, since neither group had reason to believe their side of the deal had been shortchanged in the merger. The company has continued to operate as a single combined business since closing, with Nuwan and Marieke holding roughly equal governance rights under the structure the collar ultimately settled, and with Anneke sitting on the small leadership team that runs it day to day.

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