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

September 29, 2010

Exempt Market Dealers Have Business Trigger

Canadian securities legislation creates two categories of securities that may be sold: 
(i) prospectus securities; and 
(ii) securities issued under prospectus exemption. 
Securities issued under the prospectus exemptions, otherwise known as non-reporting issuers, are typically considered to form the "exempt market". 
Under NI 31-103, a new dealer registration category is introduced in all jurisdictions across Canada to regulate the sale of securities in the exempt market - the exempt market dealer (EMD).
A critical change under NI 31-103 is the introduction of the "business trigger" for dealer registration. Prior to September 28, 2010, the requirement to be registered as a dealer is triggered by a person engaging in a "trade" of securities. With the new rules introduced in 31-103, the "trade trigger" is replaced with a "business trigger", so the dealer registration requirement will only apply to those whose trading in securities amounts to carrying on the business of trading in securities. Companion Policy 31-103CP provides guidance on what acts are deemed to be sufficient to trip the "business trigger".
NI 31-103 introduces consistent rules concerning proficiency, conduct, capital and compliance requirements and makes it clear that EMDs are subject to the same know-your-client ("KYC") and suitability requirements as other dealer categories.

September 28, 2010

Quick Facts about the EMD

The Exempt Market Dealer - known as EMD - category replaces the LMD category, making the EMD registration category uniform across the country.
Did You Know?
o Existing LMDs automatically become EMDs on September 28, 2009. You don’t have to apply.
o EMDs have capital and proficiency requirements. LMDs had none.
o Not all LMDs will require registration as EMDs under NI 31-103. It’s up to you to make the determination.
o The EMD registration requirement will apply differently in certain parts of the country.
These and other important changes in the regulation of the exempt market under NI 31-103 are discussed below in this issue.

Visit the Exempt Market Dealers association for more information: http://www.emdacanada.com/

3 Hottest Technologies for Investors

Those Harvard Business Review articles telling you how innovation works in big corporates are yesterday's news. Companies like Google, IBM, Oracle and Cisco have massive war chests to buy innovation, not grow it in their own company.
The good news is that Canada is chock full of innovators in technology doing great companies that are being bought by the large corporates for big bucks.
So see if you have one of the 3 specialties to attract investors.
3 Investor Target Technologies
1. You have Real Time Data. for example, a customer goes to a bank to withdraw cash at the ATM but is low in funds. The software checks out his business, his mortgage, his past record and decides to up hs credit for $2,000 as he has a great track record. That's real time data working to make more money.
2. Data Ownership. Thomson Reuter has rights to their data and they are deep and industry specific with their data.
3. Span or Connect the Enterprise. Risk management and compliance are the hottest words out there. One way to reduce risk is to make sure it applies across the entire company. So any technology that can reach across the entire enterprise, end to end is appealing.
Any of the above 3 will get investors itching to invest in your technology company.

Jacoline Loewen, expert in Private Equity, author of Money Magnet: Attract Investors to Your Business.

Private equity grew company at rate of return of 127%

Yellow Point’s investment in May 2005 generated an internal rate of return of 127% and a multiple of 8.5 times invested capital, when the company was sold to Tricor Pacific Capital in December 2009. David Chapman, Managing Partner of Yellow Point and Terry Holland, a co-investor in CCI and a Yellow Point LP, accepted the deal of the year honour at the CVCA's AGM Dinner in Toronto on Tuesday, September, 2010. Dave said:
“We are pleased with the successful sale of CCI Industries. The sale was truly a win-win for everyone involved. We would like to thank Bruce Clark and Norm Duplessis, co-founders of CCI, for the opportunity to partner with them on this investment. We would also like to thank Terry for his value-add contribution to the CCI board. But most of all, we would like to thank Martin Bates, CCI’s CEO, for his leadership, strategic guidance and stewardship of the business. We brought Martin in to lead the business shortly after our investment in 2005, and he did a phenomenal job growing the business and building value for all stakeholders. We are also pleased that CCI continues to be in very capable hands. Tricor is a class organization and will do great things in taking CCI to its next level of success.”
I agree that Tricor is a good private equity firm. Anna Rossetti is their professional CEO for PCI Cards and she is a firecracker.
About CCI Industries
Headquartered in Edmonton, Alberta, CCI Industries is the world’s largest producer of Allan Block garden, landscape and retaining wall systems and AB Fence products, having sold over 60 million square feet across Western Canada and Washington State. It is also Western Canada’s largest manufacturer of innovative and competitively-priced concrete masonry products having sold over 300 million square feet.
About Yellow Point Equity Partners
Yellow Point Equity Partners is a Vancouver-based private equity investment firm specializing in management buyouts and growth investments for mid-market companies. It invests in and partners with outstanding management teams of later stage private companies with the goal of building shareholder value over the long-term. It aims to be the partner of choice for management teams of Canada’s leading private companies.

September 27, 2010

Covington Deserves the CVCA Award

Covington Capital Corporation has won this year’s venture capital category award for its investment in SXC Health Solutions Inc., Canada:
“Covington first invested in SXC Health Solutions Inc. in March 2001, and upon exit in July 2010, the investment generated an internal rate of return (IRR) of 38.7% and a multiple of 13.3 times original investment.” The CVCA would also like to congratulate Canadian Medical Discoveries Fund (now GrowthWorks) for their co-investment in SXC Health Solutions Inc.
The honour was accepted by Phil Reddon, Managing Partner, Covington Capital and Jeff Park, CFO of SXC Health Solutions, at the CVCA’s AGM Dinner in Toronto on Tuesday, September 21, 2010.
“Covington’s involvement in SXC ran very deep over a 9 year period as an investor in SXC. Covington has not only been a provider of investment capital, but also a valued strategic partner and active Board member. . Since our investment, SXC has grown from a small Ontario software provider to the Canadian healthcare industry to a solidly positioned, multi-national corporation with estimated 2010 revenues of U.S. $1.9 Billion” stated Mr. Reddon.
“Successes such as these underscore the importance of venture investors in supporting growth and innovation in Canada,” added Phil.

Will Nouriel Roubini's Advice on Payroll Cuts Help?

Nouriel Roubini is giving links to his Wall Street movie cameo - seems awfully vain to me. I saw Paul Krugman on Bring me the Greek last night. What is with these economists...are they are going gaga? Nouriel and Paul may believe they are mainstreaming their subject, and I agree, we all have to move with the social media times, but Tweeting about yourself on the movie too? Come on, Nouriel, you're not Hollywood.
Here is Mish's comments on  Nouriel's latest ideas in Response to Nouriel Roubini on "America Needs a Payroll Tax Cut" Mish also gives a great email from the president of a small corporation adding his comments too. Now this is worth Tweeting, Mr Roubini:
Dear Mish: I agree with your analysis of the statements by Roubini re: payroll taxes. As a business owner with four employees, I’d welcome them; however, such breaks would not entice me to hire another employee. Have a good day.
Here is Mish's response which is exactly right:
I am quite certain that sentiment represents the vast majority of small business owners. The one thing small business owners need is customers. It's hard to get more customers when government is going to start taking a bigger bite out of everyone's pay check. This is further proof that Congress has those bills ass backwards. But hey, who cares if the economy goes to hell. After all, scoring political points is far more important!
Catch more of Mike "Mish" Shedlock

September 22, 2010

Is the US Turning Japanese?

Is the U.S. sliding into a long-running Japanese-style deflation?
After two decades Japan still struggles to deal with the deflationary effects of the sustained collapse of its real estate and financial markets in the early-1990s. So much so that China recently bumped Japan as the world’s second-largest economy in GDP terms.
To add to these persistent ongoing worries the yen has been showing unwelcome latest strength against the U.S. dollar. As a result, the once-mighty Tokyo Nikkei stock market index has again pulled back steeply and remains mired far below its peak levels of way back then. Prosperity without growth is not a pretty prospect.
Another mounting worry is of America’s ever-growing reliance on foreign debt to finance a federal deficit currently in the order of $1.5 trillion, or 10% of GDP, and counting.
In March, when I last walked past the National Debt Clock in midtown Manhattan, some one-third of the $12 trillion-plus U.S. Treasury debt (equivalent to almost 80% of GDP) was owned by China ($900 billion), Japan ($800 billion) and other foreign creditors. These holdings might well have been reduced since then. And what if this were the beginning of enough being enough? When do troublesome trends like these stop, and how should they be reversed?

September 20, 2010

The US and UK Approach to the Economy - which is right?

Worries of a “double dip” recession are not to be taken lightly. And neither the risks associated with unprecedented levels of debt sparked by lifesaving, over-the-top government stimulus and deficits and debts of all types (including household and consumer) that could well have reached dangerous tipping points.
Whereas two years ago the worries centred around the bail-out of banks, financial institutions and enterprises judged too big to be allowed to fail (e.g. “Government Motors”), this year’s focus shifted to the public sector as sovereign debt risk (epitomized by Greece, maybe also Ireland) came to occupy centre stage. And, with it, how the G8 and OECD nations, in other words the developed world, tackle disorders that could have reached explosive proportions.
The dichotomy between the fiscal approaches being taken by the governments of the U.K. and the U.S. couldn’t be greater, the one resolving to tackle its formidable deficit and debt problems head on, the other to keep the spigots open in order not to risk jeopardizing a fragile economic recovery.
Symbolically, David Cameron, the youthful new British Prime Minister, flew commercially on trips to Toronto for the G8/G20 meetings, and to New York to address the UN. From New York he took the train to Washington to meet President Obama. In between, his “accidental” coalition government (The Economist) brought down the harshest kill-or-cure budget in generations. Its aim – to eliminate a record deficit within five years through a combination of severe fiscal tightening (public service cutbacks and pay freezes, et al), higher consumer taxes (e.g. VAT to be raised to 20% from 17.5%), levies on banks, an increased capital gains tax and other private sector measures.
“When we say that we are all in this together, we mean it”, said George Osborne, Britain’s youngest-ever Chancellor of the Exchequer. Echoes of the Thatcher years are unmistakable. Times and circumstances may be different today, but a British “disease” of a different type could be taking hold as a wave of austerity begins rolling across a debt and deficit-heavy Europe. (Mr. Cameron and EU leaders might also like to note how Stephen Harper of Canada has managed to govern effectively for four difficult years with a minority government.)

September 14, 2010

Business owners need to feel they are in a dynamic market place

Castro says that his economic model is not working too well. He confessed this to an astounded journalist who probed deeper. Castro clarified further that the government took up too big a role. (Trudeau - what did you think when you were swimming in his pool as a guest?)
Business owners definitely need to feel that they are in an exciting economy, not squeezed out by government. Sometimes Canada can slide over to the Castro approach and the UK has been at it for decades, forcing my parents to immigrate.
Although everyone thinks of the UK as Europe's free market laissez-faire poster child, nothing could be further from the truth. Britain is in fact the only major democracy to have flirted with full-scale Soviet communism. 
It is often forgotten that after the war the British government confiscated the assets of most of Britain's industrialists. In 1946 the government nationalised the entire coal industry; that was quickly followed by the State confiscation of the railways, the electricity generating companies, all the country's hospitals, the telephone company, the gas companies, the entire iron and steel industry and all the shipbuilding yards. My grandfather was head of one of the ship building unions that crippled the industry and he was always telling us the business would return. It never did and the skills were lost for ever.
And then in a final coup de theatre the bulk of the country's car industry was also brought into State ownership. 
No other country in Europe embarked on anything like the scale of Britain's experiment with communism, and none experienced such disastrous results. All of the nationalised industries, without exception, fell into a death spiral of inefficient operations, militant unionism, high costs, poor quality, rubbish customer service, abysmal design, zero innovation and and ever greater reliance on subsidies from the taxpayer and protectionism. 
When Margaret Thatcher quite rightly decided to turn off the subsidy tap in the 1980s the industries crumbled. Leftists blame her for destroying British industry but the truth is that it was destroyed by decades of Labour's Clause 4 in action. All Margaret Thatcher did was administer the last rites. 
It's an interesting diversion to wonder what might have happened if the great magnates of British industry had been allowed to keep their businesses in the private sector. Would the exposure to competition and the drive for innovation, efficiency and quality that competition necessitates, have taken British industry in a different direction? Would the Brits today have a million more jobs in manufacturing and be recognised as world leaders in some industries? Would Britain still be mass producing Austins, Triumphs, MGs and Rovers? 
Worrying trends are appearing in the Obama administration's policy discussions and Canada's too. Business owners are telling me they do not want to move their work to China but how can they compete with cheap Chinese products flooding our country? 

September 13, 2010

Do You Really Want a Job with Private Equity?

Why job hunting at a company partnered with private equity is nothing like you have
experienced before.

Looking for a new job this year?
There are interesting career opportunities being created by owners of
companies who are partnered with private equity. I hire for these unique
businesses and have come to see a huge difference compared to corporate
It may seem choke on your chai tea rude to say businesses with private
equity on board do not care about your career. If you grasp this difference
though, you are more likely to get the job and make them care.
These businesses have owners. The private equity partners are also owners.
Can you put yourself in their shoes and realize how you will impact directly on their personal bank balances?
These owners are self made, ego driven characters. They have been beaten
up; it's no longer business as usual, rules have changed big time. Owners
take risks at major cost to them and their families. Now they are risking it all
again to make the leap to the global market.
Take Guy Ritchie--Madonna's ex-husband or play thing--he knew to leap out
of England, into the international movie scene. (Nothing like scorned love to
make you be creative.) Guy came to terms with losing some control and
partnered with private equity. Even though he managed to pocket a 50
million pound settlement from his missus, his private equity partners raised
$80M to film his meandering, but wryly amusing Sherlock Holmes movie.
With this partnership, Guy was able to bring in talent to appeal to a crowd
not familiar with Stephen Fry, Baker Street or high tea. The scenes between
Robert Downey Jr. and Jude Law were the best part of the movie for me,
although I am also rather fond of Rachel McAdams, but preferred her in The
Time Traveller's Wife. Did you know Brad Pitt was the executive producer?
I digress.
And that is exactly what I am talking about - when speaking to private
equity companies, do not go off on tangents, no matter how delightful
and deliciously amusing these may seem. You will appear off target and
plain wasteful.
Keep all conversations (phone calls especially) razor focused on the actions
required on the job within the first six months; why you are the one to do
this urgent and purpose-filled work. The information to get across is your 3
step plan to make the business more money than Brad Pitt could hold above
his head.
Working for owner managed companies is not like the 100 Top Companies
with toaster oven prizes at the monthly beer bash. Owners are anxious for
results, for action, for hefty pushing the wheel up the hill. Leave out
indulgent chats about your recent ski trip, why you can not make a five
o'clock appointment because you have to pick up the kids, how your child
won a scholarship to Ivey, is visiting Nepal, is on drugs or whatever. You
think you are bonding, they are hyper-judging.
If you are from a corporate environment, you will be suspected of having soft hands,
soft soaping your seniors rather than telling the harsh truth and comfortable
calling in consultants rather than rolling up your own sleeves.
Understand that about 150 other people applied, and there are 5 who are a
better fit. Realize that you can leap frog them by knowing this one tip: it is
not about your stupid career, it is about how you would help the company
bring in cash flow.
Companies where private equity is a part owner really, really care. Have
you made a company performance oriented? How did you contribute to the
top line, not the bottom line (and if you don't understand that - call your
favourite business coach.)
Private equity partnered companies work lean but give opportunity to use
brains and skills. Former armed forces people can be found in private equity firms probably because they are used to jumping out of helicopters with people screaming "Go, go, go!" That is the environment. If that does not appeal, go to the Post Office. I hear they have terrific careers.

Jacoline Loewen is a financial consultant to business owners, raises capital to grow the business and is the author of Money Magnet: How to Attract Investors to Your Business


September 10, 2010

The City Needs to Get out of the Way of Business

Ford for Mayor! Last night, at the Mayors' debate, he said the most profound statement about the City's role.
Ford said, "We need government to get out of the way of business." 
He went on to explain that government needs to let the business people get on with what they are trying to create and get on their side instead of against them.
Pretty profound.
I would like to see Ford get a big vision articulated of Toronto as a City for Entrepreneurs to come and set up as there is smart university talent here for employees, etc.Miller had his Green City, we have heard about being a Creative City, what about being a City that supports business operators?
Another point is that the mayors seem to think that all businesses are stores or cafes. There are high intellect businesses too and we also want the City to help us.
If there is funding to going to parades, what about an engineering competition and forum. Instead of just parties and drinking, what about intellectual business events? 
I am grateful though that most of the candidates realize it's time to downsize and help business do what they do best. 

September 9, 2010

Smackdown at the Gladstone

Grocery Gateway and Real Programming for Kids founders and owners are my guests to the 6 Mayors' discussion tonight on "what can Toronto do for business?"
It will be interesting as Ford, Thomson and Rossi have all had the pain of running their own businesses and know the rock face it can be.
When I listen to Stephen Tallevei, founder of Grocery Gateway, talk about his uphill struggles with getting his online grocery store to succeed, you know why being invited in as a private equity partner is a privileged partnership. Elliott Knox, RP4K, runs thousands of programming courses for teens each year and he describes his last year as similar to climbing to the top of Hamburger Hill and sent me the link to the movie.
We will be at The Gladstone Hotel, redone by the architect firm,  Zeidlers, and it is unbelievably glamourous. Anyone can attend the talk and we must thank Globe & Mail for hosting such a worthy event.

September 2, 2010

Is China ending its relationship with Capitalism?

I am listening to the head of GE speak in Toronto at an off-the-record speech to my secret handshake club.
His remarks on China at a private function were disclosed last month and have continued to stir up debate about China and America's relationship. Here is a terrific comment in response to an article on China:

I've spoken with executives at American companies that tell me they have "their own factories" in China, and they seem proud of it. But then when I ask, "Doesn't the Chinese government own 51% of your factory?" they'll then say "Yes, well, err, that's the way they do things over there, but it's our factory!"  
Not really. Since we began on this road to globalization, that is, free and mostly unregulated trade, just about the same time that Chairman Deng was opening China to Western capitalism, China has played us for fools. We've taught them how to make everything we know how to make, from steel to computers, iPods to cell phones, giftware to American-style furniture, and all the fittings and components and add-on's as well.When we decided to invade Iraq, Congress and the Bush Administration decided to keep the costs off the books and out of the budget, so we borrowed as much as $200 billion each year from China and Saudi Arabia, and a few other countries here and there. This, at the same time we were running a trade deficit with both countries and had to borrow from them to be able to afford importing all those great things we buy from China and all that Saudi oil. So while we were forcing American businesses to set up factories in China that brought in labor from the countryside at a whopping $5/day for 60 hours/week (no labor unions in Communist China, I suppose), we were exporting our manufacturing base and all of our manufacturing technology to that country and in the process enriching the Chinese government with virtually every dollar we spent. Now we're in a so-called Great Recession in which we're having to face the fact that we've lost literally tens of millions of good-paying manufacturing jobs, and China is doing great, up 10% a year, raising its general wage to another whopping $6.50/day and building what will become the second strongest naval, air and armed forces in the world. Not to mention their advanced missile technology, which they'll sell to anyone with money to buy it.
We've been such chumps.
Of course, Obama says he has a plan to create great jobs that can't be outsourced. Nonsense. The Chinese are way ahead of us in wind and solar technology. They've taken their riches and put it into vast new infrastructure projects and research, and when we finally have the resolve to build those new highways or create that new electric grid it will be with Chinese machinery and technology.
The Republicans are no help either, as they don't seem to have a clue about how to create jobs. They just want to protect the banks and Wall Street so they have the money to win elections and make it easier for the rich to get richer while denying any help at all to everyone else.
I see no future for this country unless and until we confront the outsourcing of jobs to China head-on. Globalization doesn't work for us when overseas labor is so cheap. China doesn't play by the same WTO rules in any case. It's time to establish bilateral trade agreements with key trading partners under which they can't export to us very much more that we export to them. At the same time, we need to protect key industries that are vital to our national security, like steel, metal fabrication of all kinds, shipbuilding, electronics with military uses, on and on.
There's no other way out of the downward spiral of cheap goods forcing Americans out of work, so they have less money and have to buy cheap Chinese goods, which leads to more layoff's, and down we go to being a third world country. It's time someone in Washington, and in the media, had the courage to call a spade a spade. The loss of our manufacturing base is what's killing America and unemployment won't go down until we begin to restore it.

September 1, 2010

4 Worries for Owner Operators According to Private Equity

Private equity fund managers are in touch with the business operator/owners and report that the top issues keeping these business leaders up at night are:
1) Key employee retention
2)  Management Succession in the C and V suites
3) Customer retention
4) Operational efficiency
What do you think?