Wealth Management

Voted #6 on Top 100 Family Business influencer on Wealth, Legacy, Finance and Investments: Jacoline Loewen My Amazon Authors' page Twitter:@ jacolineloewen Linkedin: Jacoline Loewen Profile

June 21, 2013

How do I sell my business?

Family business owners who are thinking about selling their companies and want to tilt the process to their advantage should start planning immediately.
“One reason our family business had a successful succession was because we started the process early,” says Laura McNally, part of the third generation at McNally International Inc., a leading Canadian tunneling and marine contractor. To read the whole article, click here.

Colin Walker explains why M&A Activity Resumes Declining Trend

First quarter Canadian M&A activity was lacklustre and resumed the downward trend that began 5 quarters ago. According to the Financial Post Crosbie: Mergers & Acquisitions in Canada database, there were 196 transactions in Q1 worth $25.9 billion. Although the quarterly decline appeared pronounced with a decline in activity of 35% and 51% in value from the strong fourth quarter (301 transactions worth $52.8 billion), Q4 now looks like a relative outlier as M&A resumed its downward multi-quarter trend. Activity in Q1 was at the lowest level since Q1/2009 and has also declined below the general range of quarterly activity observed since the financial crisis.
“The softness is in many ways counterintuitive,” said Colin Walker, Managing Director at Crosbie & Company. “Many of conditions should be quite favourable for M&A transactions but obviously, something is holding the market back. Some of the culprits likely include the macro-economic uncertainty, the impact of low rates, as well as certain sector specific issues.”
Large transaction (over $1 billion) activity hit the lowest quarterly level since Q1 2010, with only three transactions announced and an aggregate value of $7.7 billion. The largest of these transactions was the acquisition of Primaris Retail Real Estate Investment Trust by H&R Real Estate Investment Trust for $4.6 billion. The other two transactions were the acquisition of Irish Life Group Limited by Great-West Lifeco Inc. for $1.8 billion and JSC Atomredmetzoloto’s acquisition of Uranium One Inc. for $1.3 billion.
Capital groups remained relatively active in the quarter with a total of 10 transactions over $100 million this quarter for an aggregate value of $8.1 billion. While down from 21 transactions last quarter, the showing this quarter is in line with the level of activity seen in most recent quarters. Canadian pension funds continued to be active, accounting for half of all the capital group announcements, three of which were real estate transactions; a continuation of the trend seen in recent quarter with pension funds actively acquiring local and international real estate assets. The largest capital group transaction in the quarter was the acquisition of Primaris Retail Real Estate Investment Trust by H&R Real Estate Investment Trust for $4.6 billion where Ontario Pension Board was one of the buyers.
Real Estate was the most active industry sector this quarter with a total of 69 deals (worth $11.5 billion), representing 35% of total M&A activity. Consumable Fuels was the second most active sector with 30 transactions for a value of $3 billion.
The top two sectors accounted for over 50% of total M&A activity and 56% of aggregate value. In the past 11 quarters, Real Estate has been the most active sector 8 times with Consumable Fuels being the most active the remaining three times.“The weakness in M&A activity this quarter was very broad, impacting most sectors outside of Real Estate and Financial Services,” said Colin Walker. “Of particular note is the weakness in both Mining and Consumable Fuels which reflects the individual issues facing each of those sectors.”
Cross-border transactions played its usual central role in the Canadian M&A market accounting for 40% of all announcements in the quarter. While Canadian firms’ acquisitions of foreign companies exceeded foreign acquisitions of Canadian firms by a ratio of 2.2 to 1, it is notable that Canadian firms also outspent their foreign counterparts on cross-border acquisitions by a ratio of 2 to 1 which reflects the lack of any larger foreign take-overs in the quarter. The largest cross-border transaction in the quarter was the aforementioned Irish Life Group transaction.
“Canadian firms continue to actively pursue attractive foreign acquisitions, which is a testament to the relative strength of Canadian firms and is an encouraging indicator in spite of the sharp decline in overall activity this quarter,” commented Colin Walker

April 24, 2013

It’s NOT All About You, It’s About the Company You Keep


Books written by friends are always the most interesting and Michelle Bailey shares her most valuable business ideas in her new book - It's NOT all about you, it's about the company you keep.

What a great title and Michelle's book seems to be channeling other great experts. Just last week, I was fortunate enough to host an event with Warren Buffett's team who buy companies in Canada. They are part of MiTek. They sold the majority of their company to Warren Buffett and have grown their business tremendously ever since. It helped to have the Berkshire Hathaway name but it was more than that. Exactly as Michelle has written, it is about the people you have around you.
Interesting enough, David Simpson, the professor from Ivey who ran the event commented on MiTek and their obvious positive attitude. He would agree with Michele Bailey too, as he said, "I tell my MBA students, surround your self with great people. Make sure they make the room light up when they walk in, not light up when they walk out."

So get inspired and get Michelle's book - here are the details:
Oakville’s 2010 Entrepreneur of the Year has packed her first book with learnings from her challenging journey on her quest to achieve meaningful success as an entrepreneur and business owner.
Michele Bailey, President and CEO of Oakville-based Blazing THE Agency, has now authored her first book:  It’s NOT All About You, It’s About the Company You Keep
Michele’s story inspires all who hear it, because it is told from the heart and is of a journey filled with challenges, heartaches and celebrations.  From the brink of disaster to the thriving business enterprise Blazing THE Agency is today, Michele openly and willingly shares her secrets to success and the mistakes that have made her wise.
Topics range from Building Amazing Teams, Cultivating a Strong Support Network, Leadership, Strategic Client and Supplier Relationships, to Attracting and Retaining Talent.  And while budding entrepreneurs will find the information and stories within the book to be particularly relevant, business professionals of all levels will find valuable lessons and nuggets of expert advice in every chapter.
 In a world where employee turnover is high and talented resources are not easy to retain, how is it that Blazing manages to keep its Team members for such a long time and so highly motivated?  Well, you’ll have to read the book to find out. 
 My job every day is to make sure I provide the energy, vitality and support
 my team needs to excel in their jobs,” states Michele.
 The book, containing the Workbook, will be available at www.blazingtheagency.com for $24.99 and electronically for $19.99 as of April 26, 2013.  In keeping with Michele’s strong belief in “paying it forward” and in the spirit of “giving back”, a percentage of every book sold will benefit The OakvilleHospitalFoundationaswellas Partners for Haitian Children (PHC) – a signature charity supported by the company.


To continue the conversation CONTACT:  martine.d@blazingtheagency.com

About Blazing THE Agency….
Blazing THE Agency is an Integrated Marketing Communications firm that through its 18 years in business has delivered results oriented programs in the areas of Trade and Consumer Promotions, Branding and Strategic Corporate Communications, as well as Business to Business Marketing. Blazing’s has achieved excellence by providing our clients with a full range of services -  strategic planning, brand development, traditional and digital web design, video production and mobile campaigns which has allowed us to take ownership of the entire project life cycle delivering on the brand and business objectives of our clients across North America.
About the author Michele Bailey….
Founder, President and CEO of Blazing Design Inc., Michele is also an engaging, dynamic professional speaker, able to address a wide variety of topics. Michele’s experiences in negotiating a solid financial footing, making sound investment decisions, creating and mining a strong business network, maintaining a talented employee base and managing ongoing positive forward momentum are the keys to her success.
Michele’s accomplishments and credentials are many…
  • Founding member of Women Presidents’ Organization (WPO) in Canada
(www.womenpresidentsorg.com)
       Member of WEConnect Canada and its first Women-Certified Business in Canada
(www.WEconnectcanada.org)
       Winner of Oakville’s 2010 Entrepreneur of the Year Award, selected by the Oakville
Awards for Business Excellence
       2012 Winner of The International Alliance for Women (TIAW) World of Difference
100  Award – Entrepreneurial Category, for contributions to the economic
empowerment of women (www.tiaw.org)
       Chair of the Marketing Committee for The Oakville Hospital Foundation (OHF), whose mandate is to support not only the existing Oakville Trafalgar Memorial Hospital but to contribute to the required millions needed to equip the new regional hospital now under construction in Oakville, Ontario (www.haltonhealthcare.com)

April 19, 2013

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.

March 7, 2013

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

February 22, 2013

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/

February 20, 2013

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

February 5, 2013

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.

December 31, 2012

Risk of Social Media exposing your company's secrets


Crosbie tries to give its expertise and knowledge about its client cases through their social media. Due to Risk and strict OSC compliance, the partners are always vigilant about what is being said across our Crosbie social media platform. Here are a few lessons from Harvard Business School blog:
Through unwitting leaks of critical information by employees, platforms like Facebook and Twitter can expose some of your company's secrets. Leaks are nothing new; companies have been eavesdropping on each other forever. But social technologies open new channels that permit snooping on an unprecedented scale. That's why corporate social-media strategy should include not only engaging customers, gathering intelligence, and reinforcing brands, but also shielding the company from prying eyes.
Here's a quick quiz: Have you ever tweeted your business-travel plans? Does your LinkedIn profile describe what you do in great detail? Is localization enabled on your mobile device when you use social media?
If you answered yes to any of those, you and your company may have left footprints that your competitors can detect and analyze.
For example: An analyst wanted to generate data on how a major consumer-electronics company's leading product was doing. In a matter of minutes, readily available software tools mined half a million social-media comments for information about the company, revealing that 75% of 21-to-35-year-olds and 60% of 36-to-50-year-olds had made neutral or negative comments about it while people 20 and younger (a group largely underestimated by the company) showed 100% positive sentiment about it. The analyst inferred that the company was losing its business customers fast and that a competitor could gain by targeting younger users.
Employees and senior executives alike are sometimes too casual about disseminating the information they possess, or they don't understand what's confidential and what isn't. A few tweets or Facebook comments about a work project can give a competitor valuable insight into a company's product plans, and travel information might suggest that marketers or salespeople are aiming at new clients or regions.
As an exercise, we analyzed the LinkedIn profile of a senior executive from an aerospace company, responsible for sales in Latin America and the Caribbean. We noticed that he had added new links to salespeople in a new region in a short period of time. The contacts were highly suggestive of the company's plans.
RISKS
There's a vague but growing awareness of these vulnerabilities in the corporate world: One recentsurvey shows that companies are beginning to recognize the risks posed by social media to their confidential information, with 37% of employers saying that Facebook poses the greatest risk and 27% citing LinkedIn. Another study shows that only 50% of senior financial executives from both public and private companies are confident that sensitive or confidential information is adequately protected on social-media platforms.
But most companies are still unaware of the risks and the tools that can help mitigate the danger. Here are a few measures that every company should consider to reduce its exposure.
  • Assess. Determine what's important for your company to protect. Perform an internal assessment to look for the core information that you care about most, and tailor policies and actions around the findings.
  • Educate. Make sure everyone in the company understands what information might be sensitive. An individual's list of LinkedIn connections or Twitter followers reveals his or her networks. Facebook likes and favorite articles in Google Plus leave footprints showing areas a person has studied and new strategic initiatives he or she may be involved in.
  • Guide. Establish clear and simple social-media usage policies. There's a database of such policies here to help you get started.
  • Keep it inside. Implement and promote internal social networks that are walled off from the outside world. These platforms allow employees to talk shop in a social environment without risking information leakage. Use incentives to encourage adoption, and make sure senior employees lead by example.
  • Monitor. Set up continuous monitoring of employees' postings on social media about such matters as business travel, job assignments, and reorganizations. Dell, for example, has established a social-media listening center to track conversations and provide intelligence to executives. Put yourself in your competitors' shoes and war-game a determined effort to find information about your company.
  • Limit. There's little reason why your company's information should be accessible by analytical tools such as those that allow users to download critical data or analyze an individual's full social-media postings. Most tools allow webmasters to prevent spiders from crawling and indexing their sites.
  • Disable geolocation. Make sure employees turn off social-media geolocation features. Many companies have found that it's ineffective to simply forbid the practice. It's better to educate employees and show them the footprints they've already left. Take a look at what an app created by O'Reilly researchers Alasdair Allan and Pete Warden did with the geolocation information harvested from the consolidated.db file of the iPhone of a person living in New England.
Social media, by its very nature, is a tricky space to navigate. Both the opportunities and the risks are often hard to perceive. The key to seeing and minimizing the risks is to continuously test tools so that you can see where competitors might be able to find your secrets. At the same time, invest effort and senior management time in setting a good example.
Now it's your turn to act: Become a role model and help bring attention to the risks of social intelligence to your company. 

December 28, 2012

When it comes to valuation, size does matter.


Barry Critchley, Financial Post,  gives a useful summary of Crosbie and its views on GF Data's 5 year research report. Here are the highlights from the report:
• When it comes to valuation, size does matter. The data shows that for upper mid-market transactions (those between $100-million and $250-million) which have been completed by private equity groups “have consistently attracted premium multi-ples compared to smaller trans-actions.”
One key measure is the private equity total enterprise value divided by EBITDA: For the past years that multiple has been higher for larger transactions than it has for smaller sized transactions. In the first half of 2012, the multiple was about 7.9 times (compared with 7.8 for 2011) — or almost three percentage points above the comparable multiple for transactions between $10-million and $25-million completed over the comparable period.
Crosbie gives four possible reasons why size does matter: larger companies tend to have greater stability; are more able to attract greater leverage or debt financing; are in the sweet spot of the market (because more private equity groups are focused on larger transactions) and because larger mid-market companies have greater liquidity options including initial public offerings.
Crosbie is an investment bank doing corporate finance for owner operators.