Canadians watch the US bear market rally

With such a large part of Canada's GDP dependent on the American economy's health, I find private equity investing is being held hostage to he stats south of our border. As of this moment, the USA general market is still only showing a bear market rally.

The benchmark index had three instances of testing the 875-877 resistance area. The index tried again this week and traded as high as 871 on Friday but fell just short of a real test of last week's close. This area appears to be a strong resistance level and Americans need to see more strength in the coming week(s) to rise above this important level and lead the way higher.

Posted by Jacoline Loewen, Loewen & Partners and author of Money Magnet.

Housing Prices Still Falling to Correct Value

Top 7 Questions of Private Equity

What are the top 7 Questions Investors want to know about your business? Once you read this, cover them in Your Business Plan!
By Jacoline Loewen.
Most business plans are dull and, frankly, too crafted and full of motherhood statements such as market leader. Well what does it all mean and will it honestly set your potential investor on fire? Most probably not. Here are the top seven questions an investor will be wanting you to answer. So get your story written up in a dynamic business plan:
1. What's the opportunity?
It's not enough to say you've spotted a problem and a way to fix it. Investors despise those marketing studies that say "this market is expected to grow 250% a year for the next 10 years, and if we can capture just 1.7% of the market, we'll all be multi-billionaires." Instead, you need to show how your approach will work better than any previous attempts to exploit the opportunity, and how you'll make money doing so.
2. What’s your competitive advantage?
Don’t get put off by the jargon – it simply means what does your business do well. As Woody Allen said, you only have to be five minutes ahead of the competition. Maybe you have management team with a distinct skill set that a rival company couldn't easily match. Investors probably won't be impressed if you claim your advantage is having a head start on the competition — not unless you have a barrier to entry, such as a patentable product or process that would make it hard for new rivals to imitate your offering.
3. What’s your big vision?
If you are planning to be the big boy in all of Mississauga, don’t count on getting funding. If you are wanting to go international, there are consulting firms who will help your set up channels to access markets elsewhere. Show this big thinking capacity.
4. What is the secret of your future sales success?
Investors know that selling is a special talent, and one that many young companies don't have on board. They'd love to hear that you have a rainmaker on your team, or a proven sales technique that can easily be taught to others. Or perhaps you have signed on with a top sales firm who will represent your product to the USA market.
5. What have you learned from the competition?
The more specific your answer, the better. For instance, "competitor X impresses us by being so systematic in asking new customers what they like and dislike about its service. We plan to take that idea a step further by responding immediately to customer dislikes." Also, consider what is the worst thing your competition could do to your business and address this.
6. How will you use the funds you raise?
Buy a Porsche? I don’t think so! Investors are more concerned than ever that their money be spent in ways that most directly generate revenue and profits. They'd rather hear you itemize how you'll use it to hire three more salespeople and develop sales support literature than on product innovation research.
7. What are the risk factors?
Your realism in this area will reassure investors. If it's likely that competition in your industry will intensify over the next six months, then tell them you expect this to happen and explain how you plan to respond.
Jacoline B. Loewen is a managing director at Loewen & Partners, a private equity and venture capital firm based in Toronto, Ontario. Loewen & Partners works with the owners of growing, privately held companies to access capital. Jacoline can be reached at 416 961 0862 or Jacoline at loewenpartners.com.

Private Equity Myth #5: Private equity investors are only interested in your exit strategy.

When a private equity firm invests in your company, they do expect to exit their investment within the next five to seven years. Since the firm has limited partners who expect liquidity at some point, they can't hold their investment forever. However, this doesn't mean that your company will have to sell your company or take it public. Alternatives might include recapping the company with bank debt, swapping out one investor with a new private equity investor, or raising capital from a strategic partner.
In any event, your private equity partner has a vested interest in growing your company over the next several years up to the exit event. Their goal during this period is the same as yours: to increase the value of your company by expanding the business.
Focus on what's important, put the myths to rest
Whether to take on private equity is a complex decision, requiring in-depth analysis of your personal and business goals, the market environment, and the financing options available. Focusing on these important considerations -- rather than on common misperceptions -- will help you make the right decision. It's time to put the myths to rest.

Jacoline Loewen is a partner at Loewen & Partners, Toronto, Ontario, Canada office, a private equity and venture capital firm. Jacoline can be reached at 416 961 0862 or jacoline at loewenpartners.com or http://www.loewenpartners.com

Private Equity Myth #4: Taking venture capital means you lose control of your company

If you take on a minority investment, you can continue to control your company -- making all operating decisions and having the ultimate say over strategic issues. Selling less than half of your company leaves you in charge, while providing liquidity to you and other early shareholders.
Just remember though, that more work goes into your company the more ownership you give over to investment partners. You will get more heavy lifting, the higher the percentage the investors own.
In the book Money Magnet, by J. Loewen, there is a chapter devoted to this topic.

Jacoline B. Loewen is a managing director at Loewen & Partners, a private equity and venture capital firm based in Toronto, Ontario. Loewen & Partners works with the owners of growing, privately held companies to access capital. Jacoline can be reached at 416 961 0862 or Jacoline at loewenpartners.com.

Private Equity Myth #3: Private equity investors don't add value because they haven't been in an operating role.

Most entrepreneurs have ample experience with operating issues. In fact, that's one of the main reasons private equity investors should not try to micromanage portfolio companies.
However, they can add value by challenging management to think outside the box.
Investors who have backed many different companies at rapid growth stages can recognize patterns that may not be obvious to the management team. They may have a network of relationships that can also assist companies in recruiting talent at the board and management level. They can often help companies explore strategic partnerships with other firms.
Jacoline B. Loewen is a managing director at Loewen & Partners, a private equity and venture capital firm based in Toronto, Ontario. Loewen & Partners works with the owners of growing, privately held companies to access capital. Jacoline can be reached at 416 961 0862 or Jacoline at loewenpartners.com.

Private Equity Myth #2: Valuations are the only consideration

Valuation is certainly an important consideration since you want to get a fair price when you sell your company. However, it's equally important to partner with an investor who shares your goals and who will work with you to achieve them.
When you focus exclusively on valuation, you risk ending up with a partner who doesn't understand your company, your growth strategies, or your industry.
Let's say, for example, that you sell your company to an investor whose expectations for your business are unrealistically high. You may obtain a good price for your company, but that relationship is likely to sour as the business fails to meet the investor's expectations. On the other hand, an investor with a more nuanced understanding of your company would work with you to increase its value in a realistic and sustainable way.

Jacoline Loewen, author of Money Magnet, shares her insights on attracting investors. Ms. Loewen works in Toronto, Ontario.
Jacoline B. Loewen is a managing director at Loewen & Partners, a private equity and venture capital firm based in Toronto, Ontario. Loewen & Partners works with the owners of growing, privately held companies to access capital. Jacoline can be reached at 416 961 0862 or Jacoline at loewenpartners.com.

Myth #1: Private equity is a win-lose game

First myth to check out is that the investors win, entrepreneurs lose.
According to this myth, private investors somehow make off with the value of your company -- perhaps buying at a too-low price and cutting you out of the eventual rewards that you'd earn from going public or selling to another company. Remember, though, that private equity investors only make money if the value of your company appreciates -- and, in most cases, the entrepreneur retains a substantial interest in the business. After all, it's in their best interest to help you grow your company and increase its value. Almost by definition, if the investor wins, the entrepreneur wins.
Moreover, a private equity investment provides entrepreneurs with the opportunity to diversify their assets. You receive cash for part of your share in the company, which you can spend or invest as you see fit. As a result, you immediately reduce your exposure to events at a single company, in a single industry -- and can access cash that you may need for retirement, college tuition, or major purchases.
Jacoline B. Loewen is a managing director at Loewen & Partners, a private equity and venture capital firm based in Toronto, Ontario. Loewen & Partners works with the owners of growing, privately held companies to access capital. Jacoline can be reached at 416 961 0862 or Jacoline at loewenpartners.com.

J Loewen is the author of Money Magnet: Attract Investors to Your Business and is a partner with Loewen & Partners, working with business owners to raise capital and restructure finances.

The Five Myths of Private Equity

Misperceptions about private equity can prevent an entrepreneur from making a rational decision about taking on outside investors. There are five common misperceptions and I am going to spend the next week discussing why entrepreneurs should be wary of them.
As venture capital and private equity continue to make news headlines, entrepreneurs may find it challenging to distinguish fact from fiction.
- Do investors win at the expense of entrepreneurs? Are investors out to wrest control from management?
- Is an investor's sole focus on the final liquidity event?
Without question, misperceptions can prevent an entrepreneur from making rational, fact-based decisions. During my 20 years working with business owners, I have come to identify what I call "The Five Myths of Private Equity."

Jacoline Loewen is the author of Money Magnet: How to Attract Investors to Your Business and her book can be found at http://www.moneymagnetbook.ca

Myths of Private Equity

Focus on what's important, put the myths to rest
Whether to take on private equity is a complex decision, requiring in-depth analysis of your personal and business goals, the market environment, and the financing options available. Focusing on these important considerations -- rather than on common misperceptions -- will help you make the right decision. It's time to put the myths to rest.
Jacoline B. Loewen is a managing director at Loewen & Partners, a private equity and venture capital firm based in Toronto, Ontario. Loewen & Partners works with the owners of growing, privately held companies to access capital. Jacoline can be reached at 416 961 0862 or Jacoline at loewenpartners.com.