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.
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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.

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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”.

Click to read the article by Barry Critchley, Financial Post

Click to read the full Crosbie M&A Report

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”

Moderator:
Paul Harris, Director, PMAC and Partner, Avenue Investment Management

Panelists:
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 ebushell@portfoliomanagement.org

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,