Boston Private Equity Fund Managers are Heartier than Canadians

I recently visited Boston to meet with the Private Equity Funds interested in Canadian investments. It was interesting to see how many were Harvard graduates, Harvard with distinction. I also noticed that Americans cultivate a hearty, can-do welcome. It does feel louder and more aggressive than many Canadians. I liked it but could see how America is where the strong do go to excel, while the shyer ones who do not self promote may be left in the dust.
America is a pushy place and I liked it. I was reminded of the huge cultural gap in style between Americans and probably the Brits and us Canadians. What do you think of this advice?
From Entrepreneur
(Read the full article.)

Everyone likes to do business with a winner. No matter what stage of your career, you need to look like you've made it. That means wearing a suit that will impress. As a universal rule, make it your business to be the best-dressed in the room. If you lack the fashion sense, a premier store will be more than happy to assign a knowledgeable salesperson to assist you.

And if you're thinking of the budget thing again, forget it. Put it this way; a smashing, well-tailored suit will last you for years. Allocate the upfront cost over dozens or possibly hundreds of business meetings and the investment becomes a mere pittance. Remember that your goal is not to save money; it's to make the sale--leave the penny pinching to others.

Bring your ego with you in full bloom. It's not enough to look successful; you need to act it as well. This demonstrates that you are also one of the smartest people in the room.

Again, take a page from Trump. Sure, he can be garish and way over the top, but no way is he going to check his ego at the door. Neither should you. So find a way to bring up your most significant achievements, tell an intriguing story and talk up your travels, discoveries and epiphanies.

The timid and the small thinkers will talk sports and weather. They will pale in comparison to the bold winners who regale their prospects and customers with compelling ideas and stories.

I'll never forget the afternoon I spent with legendary Washington attorney and presidential advisor Clark Clifford. He didn't just "meet" with me; he held court in a walnut-paneled office, wore a suit fit for a monarch and fascinated me with vividly colored stories that thrilled as much as educated and entertained. He established himself as one of the most important people in a town filled with big egos and left the impression that when it came to lawyers in the nation's capital, there could be only one choice.

This is the challenge and the opportunity before you--to make certain that of all the salespeople your customers and prospects come in contact with, you are the one indelibly imprinted on their brains. You don't sell. You thrill.

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Mark Stevens is the CEO of MSCO, a results-driven management and marketing firm, and the bestselling author of Your Marketing Sucks and God Is a Salesman. He is a popular media commentator on a host of business matters including marketing, branding, management and sales. He is also the author of the popular marketing blog, Unconventional Thinking.

Do companies actually want to grow?

I have discovered in my work with business owners and private equity, that many owners do not want to grow their businesses. I found this wonderful twenty minute conversation between P. Bruce Hunter and Robert Gold invaluable. 
Robert is an accountant for many years to owners. He is himself an entrepreneur and business founder. Bruce drives a TEC group where he is to fire up Canadian business owners on the key issues. Bruce knows the right questions to ask - you know the ones, you do not want to think about them, never mind discuss them with someone like Bruce who is familiar with issues. I suggested to Bruce and Robert that they make this a weekly podcast conversation because they have a great chemistry. Here's Bruce about his podcast:

My recent interview with Robert Gold and Andrew Brown can be heard at BusinessCast.ca, the world's pre-eminent podcast for Entrepreneurs. I understand from Robert that it is the number one podcast on the Financial Post podcast page as of today. The subject of how to drive

BusinessCast - The Podcast for Entrepreneurs businesscast.ca

The iTunes-featured BusinessCast is the best business podcast for entrepreneurs developed to help small and medium-sized businesses.

Identifying Best Fit with Your Firm

U.S. PE funds can provide a compelling financial offer while also bringing relevant industry experience. As business owners, an investor that is able to gain a firm grasp of your business concept quickly is advantageous. Otherwise, the investor can be a costly drain on your time.

In selecting a best-fit investor, your needs as a business owner must be aligned with the investor you select. There are a wide variety of PE funds, tailored to a variety of business owner’s needs. Will the PE fund add identifiable value?

A lot of PE funds simply supply the capital injection and remain a passive investor for the term of the investment. Others are much more focused in providing a team effort with management to kick-start the growth plan.  If applicable, a PE fund can also assist with U.S. expansion.

I encourage business owners to ask for the track record of PE funds. Canadian companies should opt-out or avoid being the test case for a fund’s first Canadian investment. “What is the fund’s track record in Canada?” Call up the list of CEOs the PE fund has worked with in the past. They can shed light on the relationship and experience.

Evaluate the fund’s total strategy and investing style for compatibility. There is a huge diversity in the U.S. realm of PE funds. Funds typically vary in size of investment, industry focus, preferred stage of investment company, ownership of investment, and board participation to name a few. PE funds invest in late stage growth where products already exist and there is a revenue stream. Large investments can be up to $100 million USD in equity or as small as $10 to 15 million USD. With their equity stake, some funds may prefer a control or minority ownership position.

Typically PE funds reside on the board of the investee company as either active or passive board members. Active is good, but not undermining management, which often can be a slippery slope. The degree of diversity of investment professionals is also important as business owners should be looking for board members who provide expertise in a wide range of business areas. Maturity of the fund is also imperative as the stage of the fund’s life will dictate the timeline of investment. 

Chinese Stock market down 22%

We had a very busy week in Ontario. There was a 5.0 earthquake, with the epicenter 61 km north of Ottawa. The earthquake could be felt from Montreal to Toronto. A tornado touched down in Midland and now we are enduring the G20 Summit Lockdown in Toronto. I saw Goodluck, the Nigerian leader, get into his limo and spoke to Kola, one of the Nigerian guards. They have been enjoying the warm weather and are impressed with how clean and quiet Toronto seems. The streets are empty and it seems like a scene from Zombies in the City.

While this was happening around us, the markets were also enduring a very rough week pulling the returns for the month and the year back into negative territory. Year-to-date the S&P TSX Composite is down -.65%, the S&P 500 is down -3.77% and the Dow Jones is down -2.92%. What you may not know is that the Chinese stock market is down -22% year-to-date and other international indices are also in negative territory. The markets are currently in a trading range and we have gone back to touch the 50-day and 200-day moving averages. With more and more economic indicators coming in below expectations even the most ardent commodity bull has to step back and assess at least the near-and intermediate-term landscape. 

Private equity is awash with cash - for now. In two years time, the tides will have receded though. For business owners, entrepreneurs and CEOs, now is the time to look seriously at private equity partners. There is no market mood to affect your valuation of your business and you get experts putting their thinking caps on to build your business. Right now, we all need all the help we can get.

Jacoline Loewen, expert in private equity and family business and author of Money Magnet: Attracting Investors to Your Business which is now a text book at Ivey Business School.

If you’re following Steve Jobs’ advice, you must know the risks to growing

A business owner was happily engrossed by his business and making a great deal of money. Inspired by a speech by Apple founder, Steve Jobs, however, his dream became to grow the company more. This CEO knew that he had the drive but worried about putting so much of his personal money at stake. He could not afford to take the risk, but nor could he go to the public markets at that stage. To help his company evolve, the CEO sold 75% of the company’s shares to private equity partners. They helped build up the staff, create systems, and identify acquisitions. Ironically, his 25% share ownership ended up giving him more financial return than if he had kept 100% to himself. How incredibly satisfying when the difficult course turns out also to be the best! Of course, if you’re following Steve Jobs’ advice you must know the risks to growing. One additional point—Jobs may have lost his spot at Apple for a decade but he says the company made it through that period due to the private equity financial partners in place.

Risk is relative. A medical device company wanted to launch a new product. As the owner knew it would cost $5M to bring to market, he weighed the risks. “Right now, I’m profitable. If all goes well, the product will grow my $10M company to $30M, with a cash flow of $1M. If it does not go well, I’m in the hole for $5M and it will take me five years to break even and get back to where I am now.”

Pass!

But private equity partners will be lured to the possibility of growth. They catch a glimpse of the big fish in the dark water and appreciate the gleam of its scales; they will pick up the harpoon and take on the struggle, bleeding from holding the line, facing unbelievable adversity to bring home the fish others can only admire from the shoreline. That medical device company’s CEO settled on admitting to the conservative nature of his personal and financial goals. “I built this business in my garage and now it has to fly without just me. Let’s get in partners and share the risk.” He got enough cash off the table to cover his retirement and compensate for all the hungry years, but he was still able to stay around to enjoy the new growth with the partners who brought valuable new skills—vision, contacts, and patient capital through the storm.