Get advice from one of Canada's M&A corporate finance experts - Ed Giacomelli,

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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.

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. 

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.

Crosbie comments on research on private equity

Barry Critchley spotlights Private Equity deals over the past 5 years and the report on Private Equity by Crosbie in The Financial Post, Canada.
Read article:

All market participants have views on certain matters but until those views are researched they remain opinions without facts.

Toronto-based Crosbie & Co. Inc., which defines itself as a specialty investment banking firm, has now filled a potential void on the importance of private equity to the mid-market. The firm, which has been around for more than 25 years, recently published an analysis of 1742 North American transactions which have been completed over the past five years. The underlying data was compiled by GF Data Resources, a U.S. based firm that offers “a searchable proprietary database that provides private equity buyers, intermediaries, capital sources and valuation professionals with accurate and detailed information on business transactions ranging in size from $10-million to $250-million.”

Recently Crosbie published the results of that analysis.

“The document is powerful because it covers so many transactions over such a long period of time. One can draw some clear inferences for the broader M&A market from this unique data set, specifically for larger middle market transactions which attract higher calculation multiples,” said Colin Walker, managing director at Crosbie & Co.

Colin Walker: LinkedIn