Voted #6 on Top 100 Family Business Influencers, your expert on Wealth, Finance and Investments: Jacoline Loewen LinkedIn Profile

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”.


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,

15th Annual Canadian Private Equity Summit - InSight conferences

InSight Conferences presents the Private Equity Conference 2013

15th Annual Canadian Private Equity Summit
The Ongoing Evolution of Private Equity


November 13, 2013
Westin Harbour Castle | Toronto
Gala Dinner Fireside Chat Featuring:

  • Hamilton E. James, President and Chief Operating Officer, The Blackstone Group LP
  • Jane Rowe, Senior Vice-President, Teachers’ Private Capital and Infrastructure, Ontario Teachers’ Pension Plan 

4:30 | Getting the Deal Done
Moderator: Mark Borkowski, President, Mercantile Mergers & Acquisitions Corporation
Lorne Jacobson, Senior Managing Director and Co-Founder, TriWest Capital Partners
Ian Macdonell, Managing Director, Crosbie & Company Inc.
Sourcing and finalizing the deal in a competitive market
What business owners and shareholders seek in a PE partner
Sectors that are hot
Working on cross-border deals
Effective use of placement agencies

Please contact John He at 416.642.6133 or jhe@alm.com to book your table now!
To register online visit www.canadianpesummit.com

Build a more diverse client list, add value to your company's sale price

A business owner’s greatest worry when trying to sell the company is the prospect of receiving an inadequate price by the acquirer or being undervalued.
One of the drags on the value of a business is customer concentration. For owners planning to sell in the next five to 10 years, exporting is one way to diversify a customer base. “It’s too risky to export,” entrepreneurs often say when they’re asked about taking their brands beyond the Canadian market. “It would be a financial drain and a time suck.”
By building a more diverse client list you can eliminate the drag that is customer concentration
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Anyone want to buy a business?

The Globe and Mail, WALLACE IMMEN, had a good article on Succession:

Marketability is a particular issue for companies with enterprise values below $30-million, according to business broker Mike Haines, managing partner of M & A Network in Oakville, Ont.. “Retail is the most hard hit and hardest to sell, along with restaurants. No one really wants to get into labour intensive properties that have minimal returns and face risks due to rising transportation costs.”
You have to reconfigure the business so it runs smoothly without you, he advised. “One of the best measures of a good business is if the owner can go away for three months and the business can still continue to operate smoothly and the customers don’t miss the owner. That’s what a buyer wants to see.”
A strategy that can pay significant dividends is to bring in an investor to give the business a boost, suggested Jacoline Loewen, director of Crosbie., in Toronto. “The advice we give is five to 10 years before you want to sell, bring in strategic investors or private equity, that will buy a portion of the business,” typically about 30 per cent, she said.
“It’s a really good discipline for owners, because many entrepreneurs are used to having everyone agreeing with them because they have all the power. Sole owners also find it hard to believe that someone else would take the business and grow it far beyond what they’re doing currently. An equity owner will ask questions and look for efficiencies and ways to grow the business, Ms. Loewen explained.
“It may be the first time an owner is challenged to quantify their success and go through a comprehensive strategy process, she said. You’d be amazed how few small-business owners have figured out their key performance indicators and what drives the success of the business.”

Canada’s Commercialization Crisis and Shortage of Venture Capital: Will the Federal Government’s Solution Work?

Good article on the Government's program for the Venture Capital crisis in Canada.Click here to read. It is by Stephen Horowitz, American law firm, Choate lawyers.

Addressing Canada’s Commercialization Crisis and Shortage of Venture Capital:  
Will the Federal Government’s Solution Work?  --  that was just published in the Technology Innovation Management Review (Carleton University).   It analyzes the federal government’s $400 million VC Plan and the impact of its contemporaneously-announced phase out of labour-sponsored fund tax credits. Click here to read.

Why Owners Do Not Sell When They Should - Michael Lay, OnCap

In the Globe and Mail, interesting article with a highly relevant comment from Michael Lay, managing partner at Onex's mid-market private equity business, Oncap.

It's a tough time to acquire. Many private businesses the group has pursued have owners who believe strength is returning to the equity markets and are reluctant to sell. "Or, a number of them have said 'I'm comfortable with my business, I know it, if you guys write me a cheque I don't know what I'd do with it,'" he said.”

What do you think?


90 cross-border deals – or almost 40% of M&A deals - Finance Post

Canadians are buying foreign companies. In fact, in this last quarter, Canadian firms did 90 cross-border deals – or almost 40% of all M and A deals.

Barry Critchley, doyen of the finance industry, has the details on his interesting blog over at the Financial Post. Worth the read:

According to Crosbie & Co. Inc. 224 transactions representing $44.7-billion in total value were announced in the second quarter — or 9.4% more activity and 52% more value than in the first quarter.
“While the increase in announcements was not overwhelming, it represents a break from a declining multi-quarter trend and a return to a more normal range of quarterly activity,” said Colin W. Walker, the managing director at Crosbie & Co.: “Business conditions continue to remain relatively favourable for M&A in most industry sectors and could support much higher levels of activity.”

Brian Koscak, EMDA - Selling To Accredited Investors – You Better Get It Right!

Private Capital markets are seen to be exciting but also fraught with danger. Industry players know that they need to keep the industry as transparent as possible and as safe as possible for investors. The grandmother with her retirement nest egg needs to be ensured that her savings are not getting stolen. Just as the food industry gets government regulation to keep everyone on a straight track, so does the private capital market. The industry has created an association - the EMDA. The Chair is the dynamic, and irrepressible, Brian Koscak, partner at Cassels Brock. Here is Brian's view on accredited investors:


How many times have you seen this situation? You have an attractive investment opportunity that you would like to bring to the attention of a potential investor but they are reluctant to provide you with the details of their full financial picture. You believe they are an accredited investor (AI) but you are not sure. You need to get this right since you can only do the private placement in reliance on the accredited investor exemption (the AI exemption) set out in section 2.3 of National Instrument 45-106 – Prospectus and Registration Exemptions (NI 45-106). What do you do? Does it matter if you get it wrong?
Canadian securities regulators are increasingly concerned that issuers and exempt market dealers (EMDs) are getting it wrong and selling exempt securities to non-AIs – the public. Continue reading at the EMDA website.
 By: Brian Koscak, EMDA Chairman and Partner, Cassels Brock & Blackwell LLP
Afzal Hasan, Associate, Cassels Brock & Blackwell LLP

Cross-border activity continues to play a significant role in Canadian M&A

Activity in mergers and acquisitions is continuing to climb.
Colin W. Walker says, "Cross-border activity continues to play a significant role in Canadian M&A with 90 cross-border transactions, representing 38.5% of the quarter’s announcements."
Not only did Canadian firms continue to be very active with foreign acquisitions in the quarter but the ratio of Canadian foreign acquisitions to foreign takeovers of Canadian firms hit a record level of 3.3:1. Consistent with recent quarters, real estate was a particularly active area for foreign acquisitions representing 22 (37%) of the foreign acquisitions in the quarter.

The information above is a summary of Crosbie & Company Inc.’s analysis of each quarter’s M&A activity. The data is compiled from Financial Post Crosbie: Mergers & Acquisitions in Canada, the most extensive database on M&A activity in Canada. To read in full, please click here.

Food industry winners are doing classic roll up acquisition strategy

Sofina Foods bought Jane's Foods for their strength of brand in the breaded chicken category. Spots of activity are also happening across the ethnic food industry in Canada, which is highly fragmented, with a wide scattering of companies making revenues from $10-million to $100-million. These owners are often running lifestyle businesses and they serve a niche market, such as tropical fruit drinks and spicy snacks for Asian customers.
The range of consumers clamouring for exotic tastes such as coconut water or tandoori-barbeque flavoured chips is expanding. Big companies, including Pepsi and Loblaws, are private-label innovating in this segment. Owners of ethnic food companies are finding their products moving from the back shelves to front-and-centre at the big-box retailers and gas stations to catch the consumer eye.
There are few large ethnic food players in Canada to keep a good balance of power with the corporate retailers and wholesalers who have been consolidating. The opportunity is ripe for a large company to roll-up the smaller ones and create a significant ethnic food business.

Do Your Acquisition Strategy First

Owners of companies in the food industry or manufacturing could learn from the owner of high tech businesses. One lesson would be how to grow revenues without having to burn through R&D money.
Here is an article on Thomson Reuter, PE Hub, explaining more:

  In the world of technology, companies are increasingly moving beyond growing organically and using acquisitions to enlarge their operations. Some have also made a strategic decision to acquire R&D rather than try to grow innovation in house.
Take for example Apple’s acquisition this summer of Toronto-based Locationary, the venture-backed startup that specializes in location data.  According to a number of market experts, this deal allows Apple – which has its own R&D division – to immediately augment its mapping service so that users can access up-to-date information on local businesses.
Whether the acquirer is Apple, Google or Blackberry, the objective in these acquisitions must be carefully defined. That’s the view of John Banks, who teaches MBA students about M&A at Waterloo, Ontario’s Wilfrid Laurier University. “Regardless of how attractive the deal price or fortuitous the opportunity, it is essential that the impact the acquisition is intended to have on the company’s strategic direction be both understood and realistic for the transaction to be truly successful,” Banks says.

Sound business growth is good for everyone - even Mark Carney would agree.

By: Jacoline Loewen, EMDA Director, Director of Crosbie & Company Inc.

Public market companies had their knuckles rapped by Mark Carney for sitting on their excess cash and not
putting it at risk in order to grow their businesses. An MBA finance class would agree that unused capital indicates a lazy balance sheet. But does this apply to private companies too? Do they need to risk their capital too?

Risk and the Private Business

Here’s a quick test for you. Put yourself in the shoes of an owner of a business and assess your appetite for
risk. Let’s say you are the owner of a medical device company and your management team comes to you
and wants to launch a new product. Your team has done the analysis and it would cost $5M to bring to market, and the expected returns would be significantly greater.
As the owner, you know that $5M will come directly from your own pocket or your credit line at the bank, and depending on how it goes, might even affect the amount of money you can take out of the business for retirement. The other option is to carry on with the normal business, which is going at a slight growth rate within a relatively stable market. Here is how you, as the owner, might weigh the risks:
“Right now, I’m profitable. If all goes well, the new product will grow my $10M company to $30M, with a cash flow of $1M. If it does not go well, I’m in the hole for $5M and it will take me five years to break even and get back to where I am now.” 
No thanks - Pass!

A Bias Against Risk

You can understand why so many SMEs are growing at a low rate because they believe their business is “good enough”. Their revenues are fulfilling the owner’s lifestyle and they are a manageable size. Growth in revenues of a private company depends on the owner and their appetite for risk.
In public and larger corporations, overconfidence is a natural bias in managers. In stark comparison, private
companies’ lack of risk is more prevalent because the money is coming directly from the owners’ own pocket. The profit foregone by passing on the new product is not seen to be drastic, in the example above, it was under $10M. Yet, these decisions to push back from business expansion risk are being played out across many owner managed firms in Canada and collectively this has a larger impact on the economy.
Owners make hundreds of these decisions about their risk appetite, often alone. The penalty to the business owner and their company with this low risk vs. reward bias is that the company ends up with underinvestment and fails to achieve financial performance. The impact will become evident at the time of sale with a weaker retirement fund for the business owner. In the end their poor risk appetite will reduce their potential lifetime earnings.

Build a Company Approach to Risk

A business owner interested in improving the quality of risk may want to borrow a few best practices from private equity.
First, the business owner can ask how much risk they are prepared to carry on their own. Family business owners in particular, can be vague on this key point, and it freezes their team and discourages them from seeking new opportunities. Key personnel may even leave the company. The business owner can draw on the expertise of an Exempt Market Dealer (EMD) who is an expert in risk and can work with the owner and the CFO (if there is one) to manage and reduce their risk bias.
Retooling how to assess risk can help a company’s revenues increase and take pressure off the owner.

Size of Investment

The first place to begin to improve risk assessment is by size of project. Owners and their CEOs who look at the projects requiring larger investments will naturally have a bias against risk. Their job, and the company’s performance, will be impacted if the project goes awry.
In contrast, the middle level of the business will be taking smaller risk decisions, which on their own do not risk the financial health of the company. In fact, managers at this mid-level tend to err on the side of risk aversion too. All across the company, the growth is being held back.

Portfolio of Risk

The company CFO and senior management can work with an EMD to assemble an overview of the portfolio of risk decisions being proposed and made across the business. The individual small investment decisions can then be pooled and the discount rates applied will be far more realistic. For investments under 5% of capital, a lower discount rate can be used and management can be confidently encouraged to work with a higher level of risk.

Sensible Appetite for Risk

The EMD can assess what causes bias and will look at how the company weeds out good projects from too risky ones. They will assess if the incentive program rewards the people within the business for the right decisions. The right EMD is a valuable resource in risk management for the ambitious owner, and of course can be a valuable partner in raising the capital needed to support taking those wise risks.

Set a Process for Risk

Have a time and place to invite senior management to put up a project idea and ask them to describe the project and potential returns. Then get them to do a Scenario B but increase the risk of the project. If possible, try for three or four scenarios with different risks.
Scenarios should not be an easy percentage increase, but should include additional costs such as production
along with sales force considerations, expected market penetration rates and brand impact. Have the manager give an analysis of the best outcome and worst flop for each scenario. By pushing for the highest potential upside, risk can be made more tangible and achievable. The process will develop the skills of the team to make better investments in projects with higher returns. Scenario planning risk analysis will be more developed at the management level.

The Risk of Sole Ownership

Being the sole decision-maker, with the bulk of ownership, raises the risk profile of the business. What would happen if the owner got hit by the proverbial bus? By understanding how to spread the risk, the owner, and his/her business would not need to die too. The family and employees might appreciate that spread of the risk!
A manufacturing company’s CEO was happily engrossed by his business and making a great deal of money. Inspired by a speech by Apple founder Steve Jobs, his dream became to grow the company more. This CEO knew that he had the drive but he worried about putting so much of his personal money at stake. He could not afford to take the risk, but nor could he go to the public markets at that stage. To help his company evolve, the CEO sold 75% of the company’s shares to private equity partners.
They helped build up the staff, create systems, and identify acquisitions. Ironically, his 25% share ownership ended up giving him more financial return than if he had kept 100% to himself. How incredibly satisfying when the difficult path turns out also to be the best one! Of course, if you’re following Steve Jobs’ advice you also recall his risks vs.reward for growing Apple in the early years—Jobs may have lost his spot at Apple for a decade, but he says the company made it through that period due to the private equity financial partners in place.

Private Equity Reduces Risk

For the company owner who has an advisory board or their EMD advising them they are too risk averse, they might weigh up the benefits of bringing on board a private equity partner.
These financial experts know risk assessment and understand the psychology of managers and owners. Their
business is to analyze the net present value of investments relative to the risk, but in addition, private equity works within the behaviors of owners and their teams and are familiar with the capital-allocation and evaluation process.
Private equity partners will be lured to the possibility of growth. They catch a glimpse of the big fish in the dark water and appreciate the gleam of its scales; they will pick up the harpoon and take on the struggle, bleeding from holding the line, facing unbelievable adversity to bring home the fish others can only admire from the shoreline.
Remember that medical device company discussed at the beginning of the article? They decided on private equity partners and his EMD encouraged him to fess up to the conservative nature of his personal and financial goals.
“I built this business in my garage and now it has to fly without just me. Let’s get in partners and share the risk.”
In the end he got enough cash off the table to cover his retirement and compensate for all the hungry years. But he was still able to stay around to enjoy the new growth with the partners who brought valuable new skills—vision, contacts, and patient capital through the storm.

Decrease Ownership But Gain Growth

The business owner sets the risk by the amount of shares they sell to a private equity firm and the EMD is an expert on assessing the value of the sale of shares. It is vital to realize that you control the level of engagement and you have options – you can sell:
• 100% or 90% and walk away from the company. By selling 90%, you can keep shares and get some upside to the new ownership.
• 75% and keep some control but benefit from the skills and Herculean effort put in by your new partners.
• 30% and take on a minority shareholder—but you cannot expect these partners to be seriously hands-on
for that amount, advisory at best.
Private equity partners will not be motivated to do a great deal of heavy lifting for just 30% of the rewards. Private companies appreciate that the more ownership is shared by the investor, the more effort they’ll make to help build revenues.
When it is the owner’s money being put at risk, usually the potential loss outweighs the potential rewards.
Sole ownership results in a bias against risk, yet for the owner, to retire with more wealth, the winners have shown that risk is required.
Sharing the risk, whether by growing robust risk processes and practices with an EMD and running it with the existing management team, or bringing in private equity partners, both will improve your company’s ability to grow.
Sound growth is good for everyone - even Mark Carney would agree.

Published in the Exempt Market Dealers's magazine
Jacoline Loewen
Director, Crosbie
416 362 1709

Owners underestimate the effort needed to prepare a company for ownership succession

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.
Ms. McNally says her father and uncle decided to bring in an outside adviser and embrace the creation of a family forum to plan for succession. One of the tools introduced was a “three circle” decision-making model that directed three questions: Is this a decision for the family? Is it for the shareholder? Or is it a challenge for management? Each circle involved different stakeholders, which added complexity to the process, but it worked.
Even though the third-generation family employees were not shareholders, it was decided that it would be sensible to include them in ownership transition discussions because they held important positions in the company. As Ms. McNally’s father and uncle started to step back from day-to-day operations, they needed a plan to do it in an orderly way. Ms. McNally played a key role as change agent working closely with other senior managers.
Jacoline Loewen
Director, Crosbie416 362 1709

Crosbie on Useful Succession Strategies - Sell Your Business the Right Way

Useful podcast for CFA credits– Crosbie on Succession with Colin W. Walker and Richard Betsalel.
The largest percentage of an entrepreneur’s wealth is often concentrated in his or her business. Help clients identify opportunities for the partial or complete monetization or sale of their business. Gain the advantage of differentiating yourself in the eye of the client from other money managers by getting involved early in the succession planning process.

In this webcast presentation, the speakers discuss:
What is the market size in Canada for the number of entrepreneurs with viable businesses?
  • Identifying the primary ways to monetize or dispose of part or all of a business, including: sell to a third party, pass to the next generation, or sell to management
  • Strategies to be used when meeting with clients in order to obtain the relevant facts
  • What are the valuation parameters for private businesses? How an estate freeze, trusts, and life insurance may be utilized during the succession planning?
0.5 CE (including 0 SER) 


Director, Crosbie
416 362 1709

M&A is often characterized by incomplete if not irrational thinking

The Globe and Mail featured an article on mergers and acquisitions with Canadian companies and a professor from Wilfred Laurier. It is worth a read:
There are many reasons for companies to acquire another business and merge it with their own. One reason that companies needing the new, new thing is to use acquisitions as a substitute for their own R&D.For example, Vancouver-based Flickr, a company offering a photo-sharing application, was acquired by Yahoo Inc. for the reported sum of $35 million. Although Yahoo has in-house R&D, they recognized that by acquiring unique technologies of startups similar to Flickr, it can build market share quickly.The objective for the acquisition of smaller companies set by Yahoo in the Flickr case, or by other larger firms such as Google or Blackberry, has been carefully defined. John Banks teaches MBA students about M&A at Waterloo, Ont.’s Wilfrid Laurier University, and he reinforces the importance of identifying the purpose of buying a business.“Regardless of how attractive the deal price or fortuitous the opportunity, it is essential that the impact the acquisition is intended to have on the firm’s strategic direction be both understood and realistic for the transaction to be truly successful,” explains John Banks.Companies that use the M&A process to supplement their R&D must have access to rigorous corporate finance skills in order to be true to their mandate.  The assessment needs to be especially meticulous since research shows that this particular aspect of M&A is often characterized by incomplete if not irrational thinking,” says Banks.A smaller firm is often attractive as an acquisition target because it can have the flexibility of a speed boat that manoeuvers rapidly around larger ships. Amar Varma, founder of Xtreme Labs – which provides mobile experiences to firms – and who mentored Rypple and its acquisition by Salesforce, says, “There is the ability for a small company to be nimble and to not be hampered by bureaucracy. They can do R&D at a quicker pace and without legacy products.”
 read more...
Jacoline Loewen is a director at Crosbiewhich focuses on succession advice for family businesses and closely held small to medium-sized enterprises. Crosbie develops customized strategies, particularly in relation to M&A, financing and corporate strategy matters. Ms. Loewen is also the author of Money Magnet: How to Attract Investors to Your Business. You can follow her on Twitter@jacolineloewen.
Follow @GlobeSmallBiz 

Successful leaders can sow the seeds for the downfall of a family business

Family business can sound perfect but the patriarch can become an unchallenged tyrant without them realizing the level of their own power. Harvard Business Review has a terrific article on this topic by Josh Baron and Rob Lachenauer :

Sometimes it's the most successful leaders who sow the seeds for the downfall of a family business.
Carl was one of the most talented leaders of his generation. When he took over the family business, it was a struggling $10 million automotive parts distributor. Now after thirty years of being at the helm, Carl has developed a $2 billion company that is a leader in logistical services to hospitals in Europe, and also owns four other distribution businesses. At one point, Carl had 48 direct reports and had personally hired each one. At the same time, he cared deeply about his family and made sure that everyone was well taken care of.
But there was a darker side to Carl's success.
Although his first act was one of the best ever, he became a "problem patriarch," a very hard-driving alpha leader who hired superb talent within the family and the business — and then consistently undermined that talent.
He drove his sister out of the company by placing her in a succession of dead-end jobs. His uncle resigned from the board saying that he wouldn't be part of a "paper board," in which Carl effectively made all the key decisions. Carl responded by maneuvering to buy most of his uncle's shares. In the process, he created a leadership vacuum that threatened the very legacy he had worked so hard to build. Read more.

Jacoline Loewen is a director at Crosbie, which focuses on succession advice for family businesses and closely held small to medium-sized enterprises. Crosbie develops customized strategies, particularly in relation to M&A, financing and corporate strategy matters. Ms. Loewen is also the author of Money Magnet: How to Attract Investors to Your Business. You can follow her on @jacolineloewen and @crosbiecompany

PE Hub on Mergers and Acquisitions Renaissance - Colin W. Walker

For those of you interested in what is happening in the Mergers and Acquisitions market here in Canada, Kirk Falconer at PE Hub has a very good article posted on the Thomson Reuter website.

When will the highly anticipated revival in the merger and acquisition market take place? How much longer will venture capital and PE firms with aging portfolio assets have to wait before strategic investors are ready and willing to buy them?
These questions have been asked repeatedly since the 2007 financial crisis cast a pall over global M&A deal-making. Judging from the data, the wait for a substantial turnaround will be a little longer yet. Preliminary data released by Thomson Reuters (publisher of peHUB Canada) last week show that worldwide M&A activity in the first half of 2013 totaled US$979 billion, down 9% from the first half of last year. In fact, it was the slowest year-to-date period for international transactions since 2009.
The situation is, of course, much the same in Canada’s M&A market. In the first three months of the year, Crosbie & Co. reports that deal-making fell back to 2009 levels. This followed mixed results for 2012 as a whole, when transactions were fewer compared to 2011, but attracted higher values – a total of $183.4 billion, up 15% year over year.

Colin W. Walker, managing director at Crosbie, in a news release cites “macro-economic uncertainty” as one of the chief “culprits” behind softer M&A conditions in early 2013. 
Read more

Colin W. Walker has extensive experience in the full range of Crosbie's investment banking and direct investing activities. For over 20 years, he has played a leading role in numerous transactions including acquisitions, divestitures, financings, restructurings and financial opinions. Additionally, he managed the firm's initiative as Investment Advisor and Portfolio Manager to First Ontario Fund and has been a Director of a number of private and public companies, as well as Director of the Toronto Chapter of the Turnaround Management Association. He joined Crosbie from UBS Canada where he managed relationships and structured transactions for a diverse range of mid-market and corporate clients. He holds a Bachelor of Chemical Engineering & Management degree from McMaster University and an MBA from the Michael G. DeGroote School of Business.

Spicy foods poised for growth as global demand rises

The global popularity of spicy foods, combined with the trend towards ethnic foods in the US, makes products like Tabasco pepper sauce poised for growth. With global population growing, particularly in India and China, food companies are in demand by buyers.

Spots of activity are happening across the ethnic food industry in Canada, which is highly fragmented, with a wide scattering of companies making revenues from $10-million to $100-million. These owners are often running lifestyle businesses and they serve a niche market, such as tropical fruit drinks and spicy snacks for Asian customers.


The range of consumers clamouring for exotic tastes such as coconut water or tandoori-barbeque flavoured chips is expanding. Big companies, including Pepsi and Loblaws, are private-label innovating in this segment. Owners of ethnic food companies are finding their products moving from the back shelves to front-and-centre at the big-box retailers and gas stations to catch the consumer eye.



There are few large ethnic food players in Canada to keep a good balance of power with the corporate retailers and wholesalers who have been consolidating. The opportunity is ripe for a large company to roll-up the smaller ones and create a significant ethnic food business.

Read the whole article.

Jacoline Loewen is a director at Crosbiewhich focuses on succession advice for family businesses and closely held small to medium-sized enterprises. Crosbie develops customized strategies, particularly in relation to M&A, financing and corporate strategy matters. Ms. Loewen is also the author of Money Magnet: How to Attract Investors to Your Business. You can follow her on Twitter @jacolineloewen.

Pressure increases on the Food Industry to keep down prices

In the current uncertain economic environment, beverage businesses need to stay sharp if they are to generate the growth and profitability on which their future depends.
Whether your interests are domestic, regional or global, we have on-the-ground professionals in developed and ‘rapid-growth’ emerging markets and can bring the resources of a global team, coordinated through a single point of contact.
Our strong commitment to the sector means we can offer in-depth knowledge, practical experience, strong industry relationships and genuine global reach to help you fulfill your objectives.
Take a closer look at some of the areas for you to focus on to improve your company and supply chain.

Mergers and Acquisitions Deals are Changing.

Dramatic shifts are taking place in the world of mergers and acquisitions. The types of deals that are taking place – and the way they’re financed and executed – are changing significantly.
Your business may be looking to divest assets or to acquire assets at competitive prices to increase your market share. Either way, you need to analyze the value and risks of a deal, to understand if you have a solid business case for moving forward.

What one question would you ask the CEO?

Interesting question - what would you ask to get the CEO to show their true abilities?

From HBR: Have you ever pondered what you'd ask the CEO if you were made chairman of the board for 10 minutes and could pose one question? You'd want to make it count. Nothing about markets or strategies — CEOs have canned answers for that kind of thing. You'd want a question that would strip away the cloak of invincibility and reveal the CEO's innermost fears. A question that could tell you a lot about the company's potential under this leader. Read more.

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

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)