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

December 31, 2011

Andrew Bell helps me figure out my question for 2012 on BNN The Pitch

Throwing his usual curve ball while on live TV, Andrew Bell asked me if business in Canada was being buried by government regulation.
Since I am on the board of the Exempt Market Dealers which seeks to regulate Loewen and Partners role as corporate finance adviser to business owners, I do accept some government regulation from the Securities Commission.
What is the role of government though in helping our industries outside of the oil and mining circles?
The cost of government is nearly getting to where tax payhttp://www.bnn.ca/Shows/The-Pitch.aspxers must work until August. It is a great deal to tax in order to pay to keep our regulations and government systems running. That is where I question the removal of money from the people creating jobs and money for the communities around their business. What is the opportunity cost of that transfer of money?
What can government do to help business in Canada get stronger?
That will be my question for the year 2012.

December 28, 2011

The Pitch gives marketplace for businesses wanting growth

The marketplace of ideas is what gets our engines running, or my engine gets a rev from others. This year, for sheer engine power, my favourite TV show is BNN The Pitch.  Andrew Bell is the wonderfully curious host and for the past year I have been part of the pane that interviews the two company owners seeking capital.
Here are the details from today's The Pitch show.

Stephanie McLarty, President & CEO, REfficient
Stephanie McLarty, President & CEO, REfficient, has a way for businesses to sell surplus technology equipment to others. Her large clients generate between $50,000-$200,000 net proceeds from the process and divert 30-50 tonnes from landfills.
Christopher Serrie, CEO & Managing Partner, Building Water Solutions
Christopher Serrie, CEO & Managing Partner, Building Water Solutions, has already signed a deal with Canada's largest home builder to provide a special water filtration system for high rise condo buildings and is looking to expand.
Rick McGraw – President and CEO of Greenrock Asset Management
Sarah Prevette – Founder, Sprouter.com
Jacoline Loewen - Loewen Partners, Private Equity, author of Money Magnet.

December 26, 2011

Larger goals work The Running Room gave me a gift

Campbell Soup had a great leader, Doug Conant, who pushed his team to create a higher purpose in the business than just financial results.
I was fortunate enough to work with Doug Flynn at Flynn roofing who made the business of the outside covering of a building enormously fun.
Getting your staff to jump out of bed in the morning to work at what they believe to be worthwhile work is possible. By showing the bigger purpose of the company, employees realize they are contributing to their community more than just with dollar amount of units sold.
My seasonal shopping experience opened my eyes to the difference enthusiastic sales people can make. This year, The Running Room sales people amazed me with their interest in helping me select surprising gift ideas. My brother is an avid runner with lots of kit, yet The Running Room put together a gift basket with little products quite alien to me - like gloves that heat up with perspiration and little plastic pouches of energy goo. Thanks Running Room!
Read more at Harvard Business Review about how Doug Conant used positive feedback to reinforce the right behaviour.

Every family business should know this story

'A significant investment' in Ontario manufacturing - here is the quick story about how a Canadian 4th generation business grew beyond the family's wildest dreams.
Hamilton, Ont.-based Bermingham Foundation Solutions Ltd. has secured "a significant investment" says chairman and fourth-generation owner Patrick Bermingham.
Its new strategic partner, Soletanche Freyssinet, is part of the VINCI group, a Paris-based, publicly traded company that employs 180,000 people in about 100 countries.
Bermingham, founded in 1897, is Canada’s oldest foundation and marine specialty contractor, with a focus on the transportation, energy and mining markets. It also manufactures specialty foundation equipment and provides engineering services under the trade name Berminghammer. It currently exports equipment and services to more than 40 countries. Bermingham’s senior management will continue to run the business and remain shareholders.
How did a company with about 150 employees attract such a large foreign investor? 
Five years ago, Bermingham met Loewen and Partners who taught them about the benefits of private equity for companies under $100M. As a family business, Bermingham had slowed down its growth by relying purely on the banks. As a client for 110 years, Bermingham's bank gave good loans but not enough to grow the company at a quicker pace. Higher growth is tricky and much higher risk which puts it outside the bank's comfort zone. Private equity may have a poor reputation but so do banks. Yet, smart family business owners who have achieved considerable wealth educate themselves about why these different types of finance do have a good achievement rate. Staples, Facebook, Google and Caterpillar have all achieved their success with private equity underpinning.
Putting aside their fears, Bermingham used Loewen and Partners to build up their valuation case and brought in a private equity investor that allowed the company to recapitalize its balance sheet and build out its strategy. Bermingham subsequently repurchased 100 per cent of the business, returning the company to the family and employee ownership. Toronto-based investment banking firm Loewen & Partners, which advised the company in the private equity transaction and the VINCI one, says strong processes and reporting structure subsequently made it easy for a large firm to do its due diligence.
Backed by Soletanche Freyssinet, Bermingham now has a mandate to grow. It intends to expand its overseas operations with increased equipment sales and rentals, and enter into joint-ventures on large scale projects at home and around the world.
Bermingham's long history of innovation over multiple generations of family ownership, and the fact it has achieved continued success in manufacturing - an industry long considered on the wane in Ontario - makes this announcement significant on a number of fronts.
Read the full story at The Globe and Mail by one of my favourite business reporters, Sean Stanleigh

December 22, 2011

Quick question for a CEO - what is your company's identity?

As a CEO, here is a quick question for you.
What is your firm's identity?
Is it about the core capabilities. Is it about what you actually achieve - like West Jet that serves its employees first and then its customers. Looking after the social capital in the company will yield results.
It is about your passion.
One of my client firms is an engineering business with awkward geeks selling high level skills.
What was interesting is that they know they are sophisticated engineers passionate about using other people's technologies in new ways to create dazzling machine parts.
Even though their website did not give their capabilities a fair shake, their advisory board could all articulate within seconds the company's purpose.
Passion wins through but passion must be articulated and described.
Funny how once that is done, the strategy unfolds within each division.

December 21, 2011

Great leaders create value - both economic AND social

The point of human resources is to boost the energy levels in the organization.
Building up the employee enthusiasm while also directing their daily work in a similar enough direction is enormously challenging.
Even with Wikis or other wonderful technology, doing strategy with the top 300 people still is the more laborious but absolutely essential method.
Humans need the face time with their leadership and strategy done together is far more powerful.
It seems like busy work. Many believe their time would be better spent on a golf course.
But it is amazing how getting 3 objectives for the year does focus the company. The  Chinese leadership in government use a five year strategy and they have achieved more economic value than any other economy in the history of mankind over these past 30 years.

Follow up rigouros strategy sessions with free flowing, fun activities where people can talk quietly in small groups. The strategy will be more likely to take rot and grow.


December 20, 2011

Keep focused on the "why" of your pitch

The goal of an elevator pitch isn't to close the deal.
The point of the 2 minute pitch isn't even to give a short, accurate, Wikipedia-standard description of you or your project.
Using jargon words to craft a mission statement that is safe and could be applied to similar businesses misses the mark.
No, the purpose of an elevator pitch is to describe a situation or solution so compelling that the person you're with wants to hear more even after the elevator has stopped and the doors are opening.

December 12, 2011

There be Monsters - the story of family business succession planning

Lawyers for family businesses are often accused of not speaking frankly to their clients about the need for business succession. At the Globe and Mail Business Summit, I chaired a panel on business succession where the panel spoke about the lawyers not being informed enough or preserving their business rather than helping the owner begin to think about transition.
The real secret is that not even the owner's wife or sons or daughters will broach the subject of succession first.
If you ask that question, you have not raised the issue with a business owner.
You will observe first a slight red flush and then it could rise up into a more heated discussion and maybe a full scale rage.
Everyone else will be looking down at their papers, especially the family members. No one will come to the rescue. This owner has such a level of power over their financial well-being and future. For a lawyer, why go there and risk being fired?
There be monsters.
That is also the sad story why family businesses do not grow beyond the owner. We will leave that topic to another day.

December 6, 2011

This model is a key tool used by Private Equity

Strategy sounds hard but it is actually wonderful and business teams are always motivated once they have taken the time to hold a discussion.
Don't be put off by the complex diagram. we are going to look at this one box at a time.
This model is a key tool used by Private Equity to see the attractiveness of a business. Hotels and Airlines are under far more pressure than say a chain link manufacturing company. That will impact on the value given to the business.
If you are a business owner, if you can show you know how to deal with each of the forces affecting your business, you will get a much higher price for your business and be able to persuade private equity to accept a higher mulitple.

If the forces are intense, as they are in such industries as airlines, textiles, and hotels, almost no company earns attractive returns on investment. If the forces are benign, as they are in industries such as software, soft drinks, and toiletries, many companies are profitable. Industry structure drives competition and profitability, not whether an industry produces a product or service, is emerging or mature, high tech or low tech, regulated or unregulated. While a myriad of factors can affect industry profitability in the short run—including the weather and the business cycle—industry structure, manifested in the competitive forces, sets industry profitability in the medium and long run. 

December 5, 2011

What is the job of the Strategist?

As a strategist to mid-sized companies, my job is to get senior management to understand the forces buffeting at their business. This week's blog will focus on the 5 Forces which is still the best framework for understanding what is going on around the business and how to shape the best competitive position. My guru of choice was and is Michael Porter and when I wrote my best seller The Power of Strategy back in the mid 1990's, I had applied his model across many businesses, small and large, and diiscovered its power.

the job of the strategist is to understand and cope with competition. Often, however, managers define competition too narrowly, as if it occurred only among today’s direct competitors. Yet competition for profits goes beyond established industry rivals to include four other competitive forces as well: customers, suppliers, potential entrants, and substitute products. The extended rivalry that results from all five forces defines an industry’s structure and shapes the nature of competitive interaction within an industry.
As different from one another as industries might appear on the surface, the underlying drivers of profitability are the same. The global auto industry, for instance, appears to have nothing in common with the worldwide market for art masterpieces or the heavily regulated health-care delivery industry in Europe. But to understand industry competition and profitability in each of those three cases, one must analyze the industry’s underlying structure in terms of the five forces.

December 2, 2011

How government could support mid-sized companies

The support of mid-sized companies by German government policy is worth understanding. Canadian government gives grant money to the universities but runs into the danger of rewarding the best paper pushers, not money makers. Germany seems to have managed a balance between mid-sized companies and university research.
Germany is known for its mid- to high-technology manufacturing. While the U.S. has witnessed a decline in manufacturing output as a share of GDP, Germany's has remained steady. By specializing in medium and high technology manufacturing, Germany is able support relatively high wages. The Fraunhofer Institutes in Germany are an important reason for its continued success in manufacturing. The Institutes support manufacturing SMEs by creating partnerships between businesses and universities and encouraging industrially-relevant research in advanced technology areas. The Institutes have a budget of $2.35 billion, with $2 billion of that generated through contract research or publically financed research projects. There are eighty research centers with a total staff of 18,000 qualified scientists and engineers. The expertise and partnerships created through this initiative helped sustain high technology manufacturing in Germany and resulted in a high level of market share for SMEs, fueling broad-based export growth.

December 1, 2011

Should the government match investment funds?

Should the Canadian government encourage international VC investments into Canadian companies.
OK that is a no brainer.
Now what about encouraging international investment partnerships by matching investment amounts? That is tougher but Israel built its innovative sector with this type of LP arrangement.

Israel has one of the most active venture capital networks in the world. While the U.S. might lead the world in venture capital investments in absolute amounts, Israel has surpassed it relative to the size of its economy. The Yozma program (started in 1993) is often credited with initiating the VC industry in Israel. The Yozma program provided tax incentives for foreign VC investments, and the fund was used to match investments. This provided a mechanism of due-diligence for the investments; professional VCs had vetted the firms. Yozma was also used to invest in existing domestic VC funds to help support the new industry.
The objectives of the Yozma program were to: 1. Establish the critical mass for a competitive VC industry 2. Learn from foreign partners 3. Create a network of international contacts
Typically, investments were directed toward high-technology companies in fields in which Israel already had an advantage or competency. By 2000, the amount of VC invested in the country had soared.