US Consumer Debt

What private equity does for your business

At its recent CEO Roundtable, Loewen & Partners and the Richard Ivey School of Business recorded a podcast with Sacha Ghai, global private equity expert and the author of the McKinsey Private Equity Canada 2008 report. McKinsey's annual report is an overview of key forces affecting Canadian private equity markets. The report provides a perspective on the short and long term implications for PE players, following the economic downturn. Looking forward, PE firms will create value by focusing on attractive niche opportunities.

Listen to podcast: What Private Equity Does for Your Business -
Sacha Ghai, McKinsey & Company,
chats with Jacoline Loewen for the Financial Post Executive
Download Full Report (PDF 2.32MB)

Percent of PE by Deal Size

MID-MARKET PRIVATE EQUITY DEALS SURGE

In its analysis of private equity activity during the first six months of 2009, PitchBook Data, a private equity research firm, reveals that lower and middle-market companies continue to successfully attract PE investment. Through the first half of 2009, middle market deals accounted for 70% of all investments, more than at any time in the last six and half years.

The new emphasis on deals under $50M means more financing options for small and medium enterprise business owners.

Jacoline Loewen, Author of Money Magnet.

What you can learn from fishing

How often have you heard the story where an entrepreneur risks their business to get the big fish? Doug Trott, founder of PriceMetrix, is one of those owners and the big fish he landed happened to be one of the world’s largest diversified financial services companies - Morgan Stanley. Doug says, "We were convinced that we had a solid track record and the integrity of our product was such that Morgan Stanley would have the confidence to use our service."

However, the risk of the deal falling through was high, made even more so, given the raging financial crisis. "By the time we got into October last year, the market was tanking and then by mid-December there was talk that Morgan Stanley was going to go insolvent”, said Mr. Trott. Thankfully, the insolvency rumours were just that, and a deal was finally struck. In April 2009 PriceMetrix officially started delivery of services to Morgan Stanley. When it comes to fising, go for the big ones because you might just catch one.

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Learn more about PriceMetrix

Royal Bank's market scoop strategy worked

We have heard the market forecast from Ben Bernanke (who was nominated by President Obama to a second term as Chairman of the U.S. Federal Reserve). Bernancke's prediction is that the recession is over while the other sage of Wall Street, Nouriel Roubini, thinks we are headed for the double dipper recession model. One will be right and one will be wrong.

One indicator is to check out bank performance. Being in private equity, we hear which banks are lending on what terms to whom. Royal has been very smart to use this recession as a time to scoop up market share and get mediocre deals done. Customers remember that they were there in the tough times and are loyal back. TD was lending huge amounts to old, steady companies at great rates. National Bank takes on lots of deals that the others sniff at so we will see their performance over the next year or so. If there is a double dipper recession, that could be a problem for them

Here's more from ScotiaMcleod. Lynn Lewis sent me this by Gareth Watson, CFA

This morning as we heard from Royal Bank (RY), National Bank (NA) and TD Bank (TD). While I won't go into specifics for each bank, I will simply say that the earnings this morning were very good across the board. Royal in particular blew away the Street with strength in retail and wholesale. National Bank also exceeded expectations by having strong trading revenue again while TD Bank exceeded expectations by keeping credit in check. Coming into the quarter we knew that retail would be the wild card for the banks as wholesale strength was expected, and the results speak for themselves as retail operations have done well in a challenging operating environment (except for maybe CIBC). Capital levels are strong, if not too strong, and I hope this past quarter will finally put the dividend question to rest as earnings will support dividend payments going forward. Overall it should be a good day for the banks today and therefore possibly the TSX Index. However, I would caution that these banks have been running higher for a long time going into this quarter and that they were pricing in lofty expectations which have been met for the most part (except CIBC), so we don't think there's huge upside today as the market has probably already priced a lot of it in, but without a doubt the strength of the earnings this morning will give Royal, TD and National a good boost at the open.