Selling the family business: legacy or leftovers?

Family business owners who are considering selling are often discouraged by the question, ‘what will I do now?’ according to Dr. Tom Deans, former business owner and author of "Every Family’s Business." In an interview, Deans said that owners’ identities often get so wrapped up in the business that they find it difficult to imagine life after the company is sold.
To overcome this barrier, it’s important to frame the question more personally. He recommends asking ‘who will I be?’ The answer can then form the vision for the family legacy and provide a critical piece of the puzzle. After all, to be profitable, he or she needs to define the vision for the family business.
When running a business, most founders and owners need to reinvest their money back into the business in order to have the cash flow to build client orders. Concentrating this money into the business finances the parts and the salaries required to get product out of the factory door and into the hands of the customer. This means that extra cash is absorbed, and for many years the family business does not spin off large salaries and a wealthy lifestyle.
During the sale of a business, owners often leave legacy issues on the back-burner. Due to the hectic pace of due diligence and negotiation before a sale, issues like governance and long-term goal setting are often neglected. Yet ironically these ‘softer’ issues are often the hardest to confront.
When a company is sold (known as a liquidity event), it can bring sudden wealth – even richness – which can and will affect individuals and their families who may be unprepared.
“Making money is very different from protecting wealth,” said Deans. “Owners are good at solving problems and they can see transitioning as another problem to solve. Managing new wealth is about risk aversion and relinquishing control.”
It’s counterintuitive for owners who have success from taking risks and being in control. Within the family business, it will now be far more about being co-operation and preparing the heirs.
Choosing how to structure and manage the newly liquid assets can freeze up the owner and their family. Answering the following questions can help unfreeze the move from family business owner to family wealth manager:
What does the wealth mean for the family? Is it important to leave a family business legacy? Family business owners can create the legacy with their wealth, but Deans cautions against pigeonholing future generations.
“Many owners make the mistake of instilling pride in the family business; that life is about tradition and not about pursuing their own dreams – and definitely not about reaching their full potential. Imagine if Henry Ford had followed in his father’s footsteps as a farmer, and Steve Jobs in his father’s footsteps as a restaurateur?”
What’s the risk level of each family member? Insufficient oversight of their business affairs and inadequate awareness of potential risks means families are more exposed than they realize. Each family member’s level of risk tolerance is obvious when skiing or driving a car, but not when planning the family legacy.
What risks can the family agree to take together? Constructing a risk framework around each of the family members will give a common understanding of the family goals, reduce the stress and improve the mood at future family get-togethers.

What to do first? It’s common to delay the decision making process because the first step is the most difficult. It’s safer to maintain the status quo than to risk a family argument. Reading about other family business stories and distributing case studies of similar family business situations can begin the conversation. Organizing a meeting with other family business owners who sold and have been through the journey to wealth management will also help inspire action.

“There are financial advisors to assist business owners through this transition to wealth. Families are complex and emotional. Using financial experts is not a sign of weakness, but of strength and wisdom,” said Deans.

The road from running a family business to managing the family wealth is well-trodden. It may seem an ideal situation to outsiders, but family businesses who have gone that route know the challenges. But one thing is for certain: those who make the conscious decision to build a family legacy and get the governance in place to manage their wealth will have a smoother journey ahead. “This is how new money becomes old money.”

Jacoline Loewen is Director of business development, UBS Bank (Canada). Prior to joining UBS, Jacoline served as director of Crosbie & Company Inc., specializing in finance for private capital business, owner-operators and family businesses, specifically acquisitions, restructuring, sales, successions and private equity financing. She has over 20

years' experience working with owner operators, family enterprises and in strategy. Jacoline has authored numerous works, including Money Magnet: How to Attract Investors to Your Business, used as a textbook by various business schools across Canada. She is also a regular columnist for The Globe and Mail.

You can follow Jacoline on Twitter @jacolineloewen or contact her at 416-345-7012

Lessons in finances by FIFA World Cup Soccer 2014

World Cup soccer has lessons that can be applied to how we choose to live our lives. The National Post has a great article on the topic:
When Robin Van Persie jumped into the air and headed in the goal against Spain, the crowd went wild. Van Persie earned his reputation as The Flying Dutchman and one of the world's best players. But those astonishing plays are the exception, not the rule; teams can’t rely on them to win games. At the end of the day, good defensive soccer moves are equally important as jaw-dropping goals, although they’re often given less attention. If you want to win, stopping opponents at midfield may not bring in the glory, but it’s a vital component of the game. It’s great to score five goals, but you still lose if they score six goals against you.

The same is true in the game of personal finances. Just like in soccer, if you want to succeed, you need a good defensive strategy. It’s nice to bring in the big bucks, but if the money leaves your bank account faster than it comes in, at the end of the day, you will lose the game.
Jacoline Loewen and be reached at email - jacoline.loewen "at"

5 Ways investing is the same as running a business

Many of my baby boomer clients wonder whether they should keep their wealth in their businesses, or sell and invest the proceeds elsewhere. While they understand the need to diversify, they find investing in other markets less appealing since they don’t have the experience and perceive it to be a greater risk.
Working with business owners, my challenge is just as much about helping them invest money as it is helping them change their perception of themselves. You see, many of my clients view themselves as business owners when they should be thinking of themselves as family wealth managers. This is a surprisingly difficult shift for owners to make.
I first heard about this concept from a multi-generation family business owner who viewed his role as “caretaker of the family wealth” and, given that they had been successful for four generations of the business, there was clearly a message here.
Another difficulty for owners is to realize that their level of risk has changed. There are now a number of different investment products designed to deliver returns against specified risk levels such as hedge funds which help diversify some of the risks associated with owning only equities. The equity stock market has long been the primary diversification option, but fears of volatility, crashes and other forces beyond the control of a business owner have often seen only a small portion of their wealth invested. Today business owners can tap into a far wider range of investment options, as well as good portfolio managers at reasonable prices.
The change in mind set from business owner to family wealth manager is daunting, says David McLean, founder of the ROMC Fund. His advice applies to business owners who are used to weighing risk and the likelihood of returns, and who approach their investing with the same passion as owner-operators. Here are a few the rest at The Globe and Mail.
Jacoline Loewen is the director of business development of UBS Bank (Canada), named Best Private Bank Globally 2014. Ms. Loewen is also the author of Money Magnet: How to Attract Investors to Your BusinessYou can email her at or follow her on Twitter @jacolineloewen.
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River Cree with Crosbie issues the first cross-border bond from a Canadian First Nation

There has been a complete make over of the Thomson Reuter PE Hub website and the editor, Kirk Falconer, is scooping up stories on a usually closed industry of private equity. Here is his latest story on the innovative deal done by Crosbie with one of the leading First Nations casino enterprises:

River Cree Enterprises said it has issued the first cross-border bond from a Canadian First Nation-owned entity, tapping a group of Canadian and U.S. institutional investors. The bond issue, estimated by The Globe and Mailat $200 million, has helped facilitate the Enoch Cree Nation‘s acquisition in partnership with River Cree Enterprises of sole ownership of the Edmonton, Alberta-based River Cree Resort and Casino, buying out minority partnerParagon Gaming. Advice in connection with the acquisition and financing strategy was provided by investment bank Crosbie & Co, which confirmed that the bond issue attracted interest from investors that are active in alternative assets markets. The casino will be managed by gaming property operator Sonco Gaming Inc of Halifax, Nova Scotia. Torys LLP was one of the legal advisors on the deal.
Read the rest here

Cover-FX discovers that Private Equity does take your business to the next level

The Globe and Mail has a story of value to entrepreneurs and business owners thinking about growing their company, but choking from lack of capital.
Deals with Canadian firms are being closed by large and sophisticated investors that, at first glance, seem to fall well below the revenue threshold usually required for a chat over lunch – never mind an acquisition.
Private equity and strategic buyers are dipping their nets into shallower waters and scooping up small companies. U.S. investors, in particular, are not waiting for businesses to grow organically because they recognize there’s a risk they might attract the eye of a Canadian equivalent. Once a business has signed with a tier-one private equity firm or a strategic partner, there won’t likely be room for another investor, unless it’s at a significantly higher price.
Sophisticated investors have the experience, and the research and consumer data, to identify what might be tomorrow’s stars, given some additional capital and oversight. The trick is to spot small businesses that already have a product with market leadership potential. The company must be able to replicate its efforts in multiple markets and address a highly specific customer need.
The founders and shareholders need to demonstrate they have the operational competence to take capital and use it to roll-out an expansion strategy. Lee Graff, co-founder and president of Cover FX, a foundation cosmetics company, landed her investment partners through serendipity.
Ms. Graff was invited to lunch, under the impression she was meeting with the owner of a U.S. retail chain who was interested in carrying her cosmetics. She went over the Cover FX story for two hours. First, she talked about the specific customer need the company addressed – Ms. Graff had worked with a dermatologist for many years, mixing colour and textures onto patients’ faces.
Read the rest of the article. 

Jacoline Loewen, Advisor on Sale of your business or partial Sale of your business.
416 362 1709

Barry Critchley, Financial Post: Sluggish tone of Canadian mergers and acquisitions

How is the Canadian economy's health? One measurement is to examine the number of mergers and acquisitions being sealed across the country. As usual, finance guru, Barry Critchley, Financial Post gives details in a great article in the Financial Post. It sounds as if it is a good time  to sell your business:

Crosbie & Co. has crunched the numbers and the sluggish tone of the Canadian mergers and acquisitions continued in the recently completed third quarter.

“According to Colin W. Walker, Crosbie, Strong value in the face of weak activity partly reflects the fact that that many transactions are getting done at good valuations. Not only are there generally more buyers than sellers right now, but buyers are paying up for good quality companies, added Walker noting that valuations are being stretched because of the exceptionally attractive financing terms currently available”.

Planning for the partial or complete transfer of ownership of a business?

PMAC 2013 Annual Conference & AGM

Session V, Panel I - “Business Succession: The Preparation & Process to Sell Part or All of your Firm Internally or Externally”

Paul Harris, Director, PMAC and Partner, Avenue Investment Management
Allen Church, Partner, Specialty Tax, MNP LLP
Arthur Heinmaa, CEO, Toron AMI International Asset Management
Michael Mezei, Director, PMAC and President, Mawer Investment Management
Arlene D. O'Neill, Partner, Gardiner Roberts LLP
Maj-Lis Vettoretti, Managing Partner, Shimmerman Penn LLP
Colin W. Walker, Managing Director, Crosbie & Company Inc.

Planning for the partial or complete transfer of ownership of a business is a reality many firms will be facing over the next 5 to 10 years. Whether you are bringing in an outsider to transfer partial ownership or planning for the complete sale of your business, having the right plan and resources to assist with the transition are key. This session will provide some building blocks for successfully managing ownership change and aligning interests, including the following:
·         Building a successful internal management succession plan
·         Purchase and sale transactions valuation & negotiation - pitfalls/traps
·         Legal considerations
·         The process: making the deal successful
·         Integration
·         Recent valuation experiences

Date: Tuesday, November 26, 2013
Time: 8:00 am-4:30 pm EST; Networking Reception to Follow
Location: Hilton Toronto – 145 Richmond Street West
Cost: Members $390 + HST | Non-Members $540 + HST
Contact Eleanor Bushell at

Contact Jacoline Loewen, 416 362 1709

Entrepreneurs who obtain angel investing are more likely to survive

Harvard Business Review did a great story on the value of early stage investors. They do make entrepreneurs get professional very fast. The owner of the business finds out that they are not the only person in the room who knows what they are doing - there are some financial activities that add a significant boost to revenues. Problem that I see, owners resist getting in Angels or VCs because they think it will take away their profits. Here is a quick excerpt from HBR:
A 2010 New York Times story on lean start-ups cites experts who see a “shrinking role for venture capitalists in seeking and backing promising young entrepreneurs,” as alternatives including angel investors gain favor. Fresh research by Josh Lerner and William Kerr of Harvard Business School bolsters this argument with evidence that entrepreneurs who obtain angel investing are more likely to survive at least four years and show improved performance.
Another reason VC’s star is on the wane: Research by University of Chicago economist John H. Cochrane shows that investments in VC portfolio firms did not outperform investments in other NASDAQ stocks during the boom period of the 1990s.
In short, the VC business is bad,

15th Annual Canadian Private Equity Summit - InSight conferences

InSight Conferences presents the Private Equity Conference 2013

15th Annual Canadian Private Equity Summit
The Ongoing Evolution of Private Equity

November 13, 2013
Westin Harbour Castle | Toronto
Gala Dinner Fireside Chat Featuring:

  • Hamilton E. James, President and Chief Operating Officer, The Blackstone Group LP
  • Jane Rowe, Senior Vice-President, Teachers’ Private Capital and Infrastructure, Ontario Teachers’ Pension Plan 

4:30 | Getting the Deal Done
Moderator: Mark Borkowski, President, Mercantile Mergers & Acquisitions Corporation
Lorne Jacobson, Senior Managing Director and Co-Founder, TriWest Capital Partners
Ian Macdonell, Managing Director, Crosbie & Company Inc.
Sourcing and finalizing the deal in a competitive market
What business owners and shareholders seek in a PE partner
Sectors that are hot
Working on cross-border deals
Effective use of placement agencies

Please contact John He at 416.642.6133 or to book your table now!
To register online visit

Build a more diverse client list, add value to your company's sale price

A business owner’s greatest worry when trying to sell the company is the prospect of receiving an inadequate price by the acquirer or being undervalued.
One of the drags on the value of a business is customer concentration. For owners planning to sell in the next five to 10 years, exporting is one way to diversify a customer base. “It’s too risky to export,” entrepreneurs often say when they’re asked about taking their brands beyond the Canadian market. “It would be a financial drain and a time suck.”
By building a more diverse client list you can eliminate the drag that is customer concentration
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