Are you looking for an equity partner? Terry Didus at Heenan Blaikie has good news.

A report from Heenan Blaikie which is well worth reading.

Optimism In Canada’s Private Equity & Venture Capital Markets
Heenan Blaikie,Terry Didus, 16 April 2013

The federal government recently announced that it would be injecting $400 million into the venture capital sector in Canada in 2013. To Canada's private equity and venture capital community, this comes as welcome news and serves as a call to action for an industry that has certainly gone through some dark days in recent years. Yet, based on the activity in the last 24 months in the private equity and venture capital markets, there may yet be room for optimism.

Private Equity

Almost $4.5 billion in private equity deals were done in Canada in 2012, representing more than 110 transactions – a 25% increase over Canada's best year in 2008. In part, the number of transactions, particularly in Quebec, reflects a generational transfer of ownership among the baby boomers. As well, these numbers are reflective of a large number of going-private transactions, where many companies (that had no business going public anyway) are simply giving up on the market or find they can't live with the required level of compliance and regulation.

Venture Capital

Another telling statistic is that venture capital funds raised almost $1 billion in 2011 and $1.8 billion in 2012, and more than $400 million was actually disbursed (70% more in 2012 than the previous year). As for the $2.8 billion raised in 2011 and 2012, these are venture capital funds that will have to be invested, mostly in Quebec, over the next five years. Of the total funds raised across Canada last year, Quebec funds captured a 52% share, or $924 million. Bottom line – venture capital fundraising is at its highest level in a decade.

The Federal Government's Venture Capital Action Plan

Lastly, in January 2013, the federal government of Canada, in a studied and planned effort to provide support to Canada's underexploited knowledge-based economy, announced that it would deploy $400 million over the next seven to ten years to bolster the presence in Canada of a strong and mature venture capital private sector. This is more good news for Canadian start-ups and Canadian venture capital funds and national funds of funds, as well as foreign funds seeking to enter the Canadian market as co-investors. These funds will not be managed by the feds; instead, this program will be pushed down through the existing funds of funds network in Quebec.

The government's plan is in response to historically less-than-stellar returns for venture capital investors in Canada resulting from a lack of investor confidence, the unwillingness of large institutional investors to take a chance on early-stage companies, and a lack of venture capital funds and experienced fund managers in Canada who are able to lead successful venture capital funds. The government hopes to overcome this systemic problem with a long-term view of improving Canada's economic competitiveness by increasing private sector investment and decision-making in emerging Canadian companies with high-growth potential. Based on the experience of growing knowledge economies, such as Boston, New York and Silicon Valley, this program underscores the importance of a sustainable private sector venture capital sector, as well as recognizing other factors, such as technology transfer offices, linkages to foreign investment pools and the availability of mentors for inexperienced venture capital firms to build local expertise.

In order to do this, the government has committed this $400 million to support the creation or growth of private sector, large-scale venture capital funds in Canada. The $400 million will be allocated three ways:

(i) $250 million to establish new, large private sector-led funds of funds in partnership with institutional and corporate strategic investors, as well as interested provinces;
(ii) up to $100 million to recapitalize existing large private sector-led funds of funds; and,
(iii) up to $50 million to be invested in a handful of existing high-performing venture capital funds in Canada.

The fact that the lion's share of the funds will go to both new funds of funds (which should be up and running within the year) or existing funds of funds represents a big opportunity for foreign institutional investors seeking to enter the Canadian market and invest in Canadian high-growth companies in a significant way. With a minimum investment requirement of $10 million, potential investors for the new and existing national funds of funds are large foreign or domestic institutional investors, such as banks, pension funds, corporations, SWFs, insurance companies and interested provinces (the participating provincial governments will contribute capital on the same terms as the capital from the government of Canada).

Each of the national funds of funds must be managed by an experienced private sector general partner with a substantial presence in Canada. Eligibility for the underlying venture capital fund managers also depends on a substantial presence in Canada and a commitment to invest one-third of their total capital in Canadian-domiciled firms. The incentive structure for private sector investors will be the same in both the new and existing funds of funds. In each case, the government will privilege funds of funds capitalized between $200 million and $300 million, and making market-based private sector investments focused on maximizing returns.

Interested investors will have the opportunity to examine a draft term sheet from the government outlining:

(i) the key parameters of the funds of funds;
(ii) the funds' investment orientation; and,
(iii) the selection of private sector general partners.

Somewhat surprisingly, this program has not yet received significant media attention. The reason may be due in part to the fact that, at this point, the exact size and sectorial focus, if any, of these national funds of funds are undetermined. The decisions the government makes will depend on discussions with private sector investors and which investment strategies and conditions maximize participation from institutional and corporate strategic investors.

Jacoline Loewen, expert in mid market companies, Crosbie

Don’t Let Family Ties Bind Your Exit Strategy

Blood may be thicker than water but it can also create a way bigger mess.

Running a family business has some definite advantages, yet it poses unique challenges when creating an exit strategy.

In this PROFIT BusinessCast, Ed Giacomelli, managing director at specialty investment banking firm, Crosby & Company, explores these obstacles—including financial, leadership, social and emotional—and how best to avoid them. Great podcast and if you are interested in succession, worth the listen:
View Profit Magazine link

CFA Society Lunch - Crosbie tells the outlook for M&A activity in Canada

Selling and Buying, Mergers and Acquisitions, Financing Strategies and the Outlook for Private Equity

Date:  Thursday, May 16, 2013Time: 12:00pm to 2:00 pm
Location:  The National ClubFunction Type: Luncheon Seminar

OVERVIEW

Presentations by the  senior management  of specialty investment banking firm Crosbie & Co. Inc will cover the outlook for M&A activity in Canada, examine  trends in Private Equity  and  explore the wide range of liquidity strategies that are possible for business owners as well as  the factors that need to be considered in order to achieve a successful outcome.  Through various case studies, Crosbie’s management  will share their experiences in a variety of situations where different financing opportunities were identified and then achieved for a range of Canadian companies.  Crosbie will also highlight the key issues that need to be managed throughout such processes and how an advisor can add value. With more than 2.5 million owners of medium sized businesses in Canada beginning to retire, an estimated $1.2 trillion in business assets are poised to change hands – the largest turnover of economic control in generations.

SPEAKERS

 Ed Giacomelli, Managing Director 

With  over 25 years of experience in investment banking, corporate finance and capital markets, Ed has advised public and private clients on domestic and cross-border engagements, including leading M&A transactions, raising capital and providing independent financial and strategic advice.  His clients have included entrepreneurs, family-owned businesses, public and private companies. Ed is a media commentator and speaker on M&A trends and capital markets. He has served as a director of public and private companies and is on the President’s Council of St. Michael’s Hospital Foundation.  Ed holds an HBA and MBA from the Ivey School of Business, University of Western Ontario.

Ian Macdonell, Managing Director 

Ian has 20 years’ experience in a broad range of investment banking activities in both Canada and the United Kingdom. Prior to joining Crosbie, he was Executive Director, Corporate Finance at CIBC Wood Gundy Securities and Vice President, Corporate Finance at RBC Dominion Securities. He has played a primary role in numerous merger & acquisition advisory assignments and public and private debt and equity financings across a variety of different industries. He graduated from Queen’s University with a BSc in chemical engineering and completed his MBA at the Ivey School of Business at the University of Western Ontario.

Jeffrey Ng, CFA,  Vice President

Jeffrey has over 10 years of investment banking and corporate finance experience  including advising private and public companies across a wide range of industries in various M&A, financing, valuation, and other board advisory mandates.  Prior to joining Crosbie, he spent over 5 years at Wachovia Capital Finance of Canada.  Jeff has a Bachelor of Business Administration degree from the School of Business and Economics at Wilfrid Laurier University, and is a Chartered Financial Analyst.

WHO SHOULD ATTEND

Investors in public and private companies, investment bankers and analysts.

 To Book:  or go to http://www.cfatoronto.ca/

Get advice from one of Canada's M&A corporate finance experts - Ed Giacomelli,

Get advice from one of Canada's M&A corporate finance experts - great show with Ed Giacomelli, Crosbie, on BNN.
Press here to view.
or here is the link:  http://ow.ly/hTXLZ

Recovery of US Car Sales

Good news as early signs show the US economy is getting going again. The Globe & Mail sum up the car sales and the impact on Canada:

 the recovery of U.S. sales from the depths of the recession is creating strong demand for the cars, crossovers and minivans cranked out by auto makers’ assembly plants in Ontario, many of which are running on overtime. The U.S. market is the destination for about 80 per cent of the vehicles that come off the assembly lines operated by the five manufacturers that build vehicles in Ontario.

“The biggest driver of this year’s story is going to be replacement [demand],” Ken Czubay, vice-president of U.S. marketing, sales and service for Ford Motor Co. said Friday. “When the fleet is 11 years old, you can imagine the fuel economy that they used to get on an 11-year-old vehicle. They are now getting significantly better fuel economy,” Mr. Czubay told analysts and reporters on a conference call.

Kurt McNeil, vice-president of U.S. sales operations for General Motors Co., pegged the January sales rate at 15.3 million, up about 14 per cent from January, 2012, and 50 per cent from January, 2010.

“This says to us that we continue to recover strongly from the recession despite the headwinds of higher taxes and lower government spending,” Mr. McNeil said on GM’s conference call.

Both Ford and GM reported double-digit increases as did Chrysler Group LLC, Honda Motor Co. Ltd. and Toyota Motor Corp.