With a Name like Schmucker's

Are you afraid that your family business will be taken from you if you partner with private equity? Mark Schmucker is the fourth generation leader of Schmucker and was recently in Toronto giving a presentation about how the family business mystique pays off in sales.
Mark showed advertisements from the 1960's which could play today just as successfully with their emphasis on family living, green lawns and a plate of jam sandwiches.
Mark says that in the early 90's, during the big market downturn, his father and uncle made the decision to bring in private equity partners. At the time, the Schmucker business was not doing well and there were family issues too.
With the help of partners (not just lenders) who put in cash but also brought a great deal more, Schmuckers began their growth tract by starting off buying Jiffy peanut butter. Mark says at first the family thought the spread into breakfast foods seemed too ambitious and peanut butter seemed crazy, but today they are happy because they own 8% of a billion dollar company, fifth in their industry.
Not bad.
Jacoline Loewen's book, Money Magnet: Attracting Investors to Your Business, goes through this challenge for business owners to decide if they want to be in control or get wealthy - lifestyle or legacy. Schmuckers chose to go with "get wealthy" and found out what thousands of family businesses have learnt: giving up some of the company to private equity partners results in a lot larger amount of money.
John Loewen says, "bringing in private equity partners to a family business is probably the smartest plan if owners want to pass along the wealth of the business to future generations. Like Mark Schmucker, you do not need to won 51% to have control of the company and private equity gets the mystique of family businesses."

Globe & Mail Tells How to Get Ready for Investors

Are you getting ready to find investors to partner with you in your family business? Listen to this podcast on Report on Business, Globe & Mail, with J. B. Loewen, author of Money Magnet and a partner with Loewen & Partners.

Private Equity Includes Dragons' Den

Dragons' Den, the CBC's hit reality TV Show, is a glimpse into the world of private equity. You can get a good feel for how private investors react to entrepreneurs relying on attracting their funding.

Private equity actually means privately held money - money not invested into the public markets which are open for all. With the IPO being a bad choice due to to the onerous costs of SOX and the bubbles now happening more frequently and with larger ups and fast disappearing "pops", private equity is finding itself to be a welcome option for business owners.

Jacoline Loewen, author of Money Magnet and partner with Loewen & Partners, does some blogging on Dragons' Den and points out the business lessons to learn as these millionaires react openly to entrepreneurs.

Canadian Venture Capital Conference Coming Up

Read the details about the great conference coming up in Toronto, October 12th, held by the Canadian Venture Capital Association -CVCA.
The topic is about going global and Canadian companies are discovering that they can take their strong products to other countries and do very well. It's not just Four Seasons who can go for the top.
Many of the Canadian private equity funds know how to help company owners grow their companies and find success outside of Canada. While working at Loewen & Partners, I have been surprised by how many Canadian companies are already deeply engaged in other countries with more than 80% of their sales from outside of Canukland. We are gaining confidence and it is great to be part of building the Canadian economy.
The cost of the conference is under $300 and it is worthwhile having the chance to be inspired by other entrepreneurs and bump into many of the fund managers themselves.

What Does the Crisis Mean for Private Equity?

Private Equity has passed through a Golden Age, but will now spend a year or so in "purgatory" before entering an even greater period of expansion, or "Platinum Age," according to David Rubenstein, co-founder and managing director of The Carlyle Group, the Washington, D.C.-based private equity firm with more than $70 billion in assets.
In a keynote address at the 14th annual Wharton Private Equity and Venture Capital Conference titled, "Harnessing the Winds of Change," Rubenstein said the credit crisis triggered by subprime lending has brought the growth of private equity investment to an abrupt halt.
When credit markets dried up, large banks had already committed to $300 billion in private equity deals, Rubenstein noted. About a third of that value stayed on bank balance sheets, although much of it has already been written down, he said. Another third was renegotiated with tougher terms for private equity sponsors. For the final third, the deals were never completed and are now the subject of litigation or break-up fees. "For the next year or so, we will be in purgatory. We will have to atone for our sins a little bit," says Rubenstein. As head of Carlyle, one of the biggest private equity players in America and the world, he also believes that the next wave of private equity will be stronger than ever and will start in early 2009.
In Money Magnet, this theme of the breakdown of the big, public markets and the build up of private equity partnerships as an alternative to the Wall Street and Bay Street is discussed in depth.
"It is becoming more pressing, says Jacoline Loewen, "that private equity managers do a better job of explaining how they can improve companies and deliver strong returns that lead to increased employment and economic expansion overall.