How to Deal with Financing

I recommend ReadWriteStart which makes book recommendations. ReadWriteStart's Chris Cameron talks about how the website, "has resources and tips for young companies looking to raise funding from venture capitals and angel investors. This week's recommendation for our Weekend Reading series, Money Magnet: How to Attract Investors to Your Business by Jacoline Loewen, is a book aimed at helping entrepreneurs learn how to deal with financing and how to make their businesses attractive to investors."

Book this week: "Author Jacoline Loewen is a Canadian business consultant and strategy writer who has aided companies seeking capital and private equity. In Money Magnet, Loewen provides valuable lessons she has learned from her career on raising capital in a style that is "informative, relaxed and easy to understand."

Read more.

3 steps to take if Private Equity has not replied to your Resume

Needing a Financial Analyst number cruncher to take over a challenging role left by one of my employees who has returned home to China, I began a search. I received an overwhelming response, probably because it is spring of a terrible drought in jobs; and we are in the cutting edge industry of private equity.
Many MBA graduates also have sugar plum salaries dancing in their heads that are just not the reality on the Street.
I had the resumes for a month, I went away on vacation and thought I had got return emails covered by one of the staff. I was wrong, the emails had not been sent.
When I returned, I received a scathingly rude email from a young man incensed by my greed and how I had not replied to his request to get the job. At first I thought, "Ah, this must be a number-oriented young man who is obviously challenged in his inter-personal skills. Good point that he made about getting back to him."
I took that input, even though the reasons he gave were not my intent at all.
That young man rushed to give me his views on why I was not replying to his email. In his judgement, which he revealed in great detail in his email, I was worse than the greedy Wall Street Robber Barons. I could imaging spittle flying from his mouth as he laid out the injustice of it all to me. He would teach me a lesson that I did not know as I was blinded by greed.
Oh dear. It was just that I had bumped into one of those trade-offs in career. I had taken a long vacation with my family, and it cost me productivity in my business. If this young man had just inquired and prodded me politely, he would have found out why the silence.
Here is a great Harvard Business School tip of the day for this young man; perhaps it will help with his future job search:
Link to HBS

Silence is the worst kind of feedback — it is ambiguous and generic. When you don't know why someone hasn't called you back or responded to your email, it is all too easy to assume the worst. Here are 3 steps to take if you're getting the silent treatment: Accept that you don't know. Acknowledge that you don't know what the silence really means. Resist the temptation to fill in the blanks with your own insecurities. Ask for clarity. Reach out to the person and ask him to tell you why he's not responding. Believe the answer. Whatever the response — he was too busy, he forgot — don't read between the lines. Accept it as truth and move on. Jacoline Loewen, Money Magnet, Attracting Investors to Your Business

Is consulting borrowing your watch to tell you the time?

Do consultants actually add to your bottom line with their additional work inside your company?
Watch video
The Lords of Strategy is a good read on whether thought leaders add value to a business and this is an interview with the author, Howard.Kiechel.
It is hard to remember a time  when business did not have strategy but it was only developed in the Seventies. It was the first time they had a systematic way to look a their customers and their processes, along with their costs.
Concepts have developed further and it is so common now for companies to have a strategy, that we overlook how powerful it can be. Michael Porter was the first to create a strategy course as part of the MBA curriculum.
Now, strategy is more specific and granular looking at specifics.
Strategic planning is now not the big plan; it is more adaptive and looks at how to change more quickly. Strategy has fought between the strategy number people and the strategy people people. Tom Peters lead the camp focussed on people and has now gained the same recognition.
Strategy has a place still. Companies have a difficult time asking and the big three strategy questions:

1. Who is your customer?
2. Who are your competitors and 
3. What are your costs?

These three still stand as the big three questions that every company needs to discuss. The Big 3 Car companies in the US stopped asking on all three and look at where their results are compared to twenty years ago.
The best consultants are those that are either great on the people element or are looking for the patterns and pushing to ask the right big three questions.
http://blogs.hbr.org/video/2010/03/the-secret-origins-of-corporat.html
Jacoline Loewen, author of Money Magnet, Attracting Private Equity to your Business.

Private Equity pulling through recession in better shape

Private equity-backed companies seem to be pulling through the financial crisis in better shape than other comparable business, especially issuers of speculative grade or high-yield debt offerings, according to a study from the Private Equity Council (PEC). (Read more.)
The study measured the annualized default rate for more than 3,200 private equity-backed companies acquired between 2000 and 2009 and held through 2008 to 2009, which is where the PEC bracketed the recession. The default rate for those companies reached 2.8% in that time, compared to 6.2% for other firms.
During the recession, the majority of the transactions that eventually defaulted involved little to no leverage, according to the study.
The report challenges other studies done by Moody’s Investor Service and Standard & Poor’s (S&P) suggesting that “overleveraged” portfolio companies held default rates several times higher than their peers.
In The Buyout of America,  author Josh Kosman suggested such woes would be similar to the subprime meltdown. Kosman writes that the private-equity market would bust when more than $1trn in debt comes due between 2012 and 2015. Another study done by Boston Consulting Group (BCG) in 2008 forecasted that almost half of the world’s private equity-backed companies would default.
According to PEC, the BCG study “significantly overstated the problem,” and default rates register roughly 30% below its projections.
Ouch!

Who makes the lion's share of profits?

Having just spent time at Ivey Business School, it reminded me of my MBA days and how we all dreamed we would change the world...or at least change a business. One of the reasons I was driven to go to business school was because early on in my career, I met two Ivey MBAs who were finding tanking businesses, raising some private money from wealthy Bay Street lawyers or traders, and using the cash to get the banks off the flagging businesses' backs.
I hung on every word as these two men described how their work added jobs to businesses, revived business owners and breathed new life into products and processes. I could see their excitement and I wanted to do the same sort of work.
I was intrigued by the difference a cash injection of equity would make. Once the business owner and team  were no longer answering calls from the bank, they could get the business back to the challenge of finding and serving clients - paying clients. As the energy flowed back to marketing and service delivery, it would be like a massive log jam freeing up, suddenly returning the river to a confident flow. So many companies need that financial reprieve to gather themselves and get the business back to doing what it excels at doing--and I don't care who you are, no CEO enjoys looking for capital when the business is struggling. There's no worse confidence drainer.
Back to those 2 MBA guys I admired--it was their ethics of seeing the business owner move up the business to a new level or re-finding their edge. This joy is working as a team clearly was their magic sauce to their success. When I visit private equity firms today, I want to see that same secret sauce as they talk about current portfolio companies. I want to hear their pleasure in working as a team to take a company to a new level. It is easier to find Private Equity who can ramp up processes, but the culture and attitude is rarer.
McKinsey & Co studied the financial success of private equity firms and discovered that in fact, only the top 20% of private equity funds make the lion's share of profits. True to their style of quality research, Sacha Gaie at McKinsey dug deeper and came up with a range of activities the good Private Equity firms practiced and it did come down to strategy and other team work. The study did not have a specific measure for team work or ethics or pure good spirits in dealing with each other, but if that could be quantified, it would explain a great deal of who succeeds and who gets to go home broke.
My two Ivey MBA heroes went on to be top of the industry which is now known as private equity. I always held them up as my guide to how to work with others. I went to business school to learn more of their skils and I find it ironic that without seeking it on purpose, I am in that fantastic industry called private equity hopefully helping business owners and CEOs reach their dreams.

The Best Resume for Private Equity

It is now popular to land a private equity job which makes your first point of entry—your resume—all the more important. Lack of understanding about what are the attractive points will be picked up and could eliminate you from the running. Whether you're applying to a middle-market firm or one of the largest PE firms -- it's worth taking the time to scour over the details with a fine toothed comb. For a PE job, even one spelling error will get your resume tossed by the first level screener.

Something most job applicants do not realize is that even the largest PE firms are small in size, it's important to come across as a potential fit to each particular firm by truly understanding the demands. Every firm has a different culture and what they view as requirements for candidates .

Making matters more complicated, "a private equity resume has to go into a lot more details because you have to demonstrate results," says Jacoline Loewen, author of Money Magnet, who creates resumes for job seekers. Once you've gathered all of the details, keep in mind that your resume can be longer than the traditional one-page resume -- provided the information is necessary.

Here are some more tips on getting all of those details right:

Tailor to Fund’s Industry Focus
Private Equity firms focusing on specific industries, it's important to highlight your involvement by tailoring your resume to each company and position. Check out their website and look up their portfoli companies. Then build your resume to show where you have related experience. With so many applicants, Private Equity funds have the choice of making sure the people they hire have specific industry experience. "Having a couple of different versions of a resume isn't a bad thing," Loewen says. For example, if you're applying to a private equity firm that focuses on construction, it's important to have a resume that covers details from any previous experience.

Stress Financial Modeling Experience
To demonstrate your financial modeling experience, mention the results of the analysis performed and the area where it was applied when writing bullet points for your job descriptions. Adding any advanced-level Excel work can be another helpful way to demonstrate your expertise.  Private Equity does not want to train employees on how to do the bells and whistles of modelling. Thy do want to see that you adore number crunching.
Demonstrate Deal Experience
Whether you've worked on deal origination or oversaw a portfolio, demonstrating deal experience during your previous employment is key. Attract attention by setting apart the types of deals you worked on in a separate section at the top of your resume. When recruiters or hiring managers pick up your resume, deal experience will be the first thing they notice. You can also add additional competencies to the top portion of your resume then follow with a reverse chronological format to make the resume semi-functional and loaded with keywords for electronic screening.
List Other Interests
Personality-defining hobbies or activities can increase your chances of landing a job at many PE firms particularly if they reflect the interests of those in the Fund already. The performance-driven culture can create a stressful work environment so hiring managers look for candidates that will fit such a demanding culture. Don't ever underestimate the 'additional info' section of your resume. Include something that's not necessarily academic, a lot of the times people want to talk about that. Favorite sports teams or unusual hobbies listed on a resume can often spark a conversation and help your resume standout.
Don't Exaggerate
When a junior-level applicant puts in their resume that they single-handedly led a multibillion dollar transaction that raises a red flag about the rest of their resume. It is smarter to be accurate about how your role and what specific tasks you accomplished.  Additionally, many recruiters compare your resume to your LinkedIn profile to further track discrepancies.
Boost Your Education
Even if you didn't get an M.B.A. from Ivey Business School, having the name of a good business school on your resume can help. Consider attending an executive education program or a certificate program at a good business school that focuses on furthering your private equity career like investment management. MBAs are becoming run-of-the-mill and other financial degrees will add more, such as the Certified Financial Analyst or CFA. This additional degree separates the wheat from the chaff when it comes to the  private equity skill set. You have to be able to number crunch and an MBA is not really designed to build that skill set. The CFA, in comparison, does just that.

What is the ultimate objective of every private equity investment?

 The ultimate objective for every private equity investment a Private Equity firm undertakes is to create a company that produces superior products or services and operates efficiently to maximize financial growth.
To repeat that in language that the entrepreneur understands: The goal is to help companies grow.
If you want to grow your business, you have to state "Our company will grow at a xyz rate" as a corporate goal, and you have to get everyone on your business knowing this is the goal. After that, define the growth rate at 21%, or whatever you want, and why.
Give a reason for the growth rate. Do you want to be Toronto's best, Ontario's best or the world's best make of toys? Spin Master gave their vision out to public view and set an aggressive growth target. They wanted to be the world's best toy company and to make $500,000M revenue. Then they went for it. 
Spin Master is now a $900,000M revenue company and are a Canadian success story. To think that they began by making little faces out of stockings and when you added water, grass grew out of their heads. Remember those?

Are entrepreneurs a little crazy?

Kevin O'Leary of Dragons' Den fame, but also a savvy investor and a strong entrepreneur, got my attention when he said he likes to look at the deals where the people are a little crazy. Kevin says, "Crazy as a fox."
Why would that be? Kevin says it means they are thinking outside of the box and will push that much harder to succeed.
At a recent Women's Post event where I was invited to present for the Courage to Lead series, I mentioned the "crazy" part. My co-panelists agreed whole heartedly but I also received a great deal of feedback that so many business owners believe this to be true about themselves.
I received a letter from Licious owner, Joan Embury, who said, "Your comments on "a little crazy" resonated as how many of us have not thought that of ourselves and our businesses at some point; particularly before dropping off to sleep in a state of exhaustion and anxiety. We don't have to go and get committed."
So, let's go and be a bit crazy!

What tipped it for the winning team at IBK Ivey Business Plan Competition?

Sitting in an Ivey conference room this weekend, for the final judges' deliberation over who would win the IBK Ivey Business plan competition, I was struck by the passion of the private equity people in Canada. Peter Frisella of Tech Capital was smart, Deryk Smith of Edgestone was open and Albert Behr was his usual punchy self and had his son along too. The IBK family team was there, son Michael White is curious and Matt Hall from Covington gave his piercing assessment. Jason Zan from Rogers was in the same MBA year as Spin Master's Anton Rabie who spoke the previous evening.

I joked that there should be a prize for best judge too. We talk about about how that elusive concept of passion makes a person get through the bad stretches of business and push to the finals, but these private equity experts were top of class. 

We went over the merits of each of the three finalist plans. Which one would earn back money? How much potential money was also the big sticking point as one was a medical device put forward by a group of superb engineers and if this went through FDA approval, would be a great revenue spinner. The other was a software web application which could get sold quickly, but for $5M to $7M, waaaaaay less than a medical device. This company and was already making $25,000 a month in revenues and many judges expressed concern that it was an easy-to-replicate widget. The presenters were also engineers - memo to my two sons, please study your math and science.

We went around the table and listened to the one expert medical investor and then we voted. It was very close but what tipped it?

The quality of the presentation and PowerPoint. 

The two lead products were very different. Both could push forward and do well but only one could get the cash that day. When we added in the quality of presentation, the widget won.

I spoke to both groups afterwards and was impressed with the integrity - too often these business plan competitions attract scammers looking to get some quick money. Seriously. Althought not in this category, many of the presenters were also presenting at other competitions, like TIE. They make a business of entering business plans which I guess is a good way to get seed cash. So it is good to see that the real entrepreneurs who have that passion get the dough.

As for the private equity judges at the IBK Ivey Business Plan event, these are all seriously good people with entrepreneurism running through their veins. It's was a great weekend for Canada.

Well done to the student organizers: Navtej Sidhu and Karamdeep Nijjar. Karamdeep is going to be working with iNovia Capital  and Navtej is currently job hunting. I would recommend them highly as they were professional, warm and  absolutely in control of the whole schedule of the conference. Quite the roll-out! You can reach them at Ivey Business School.

What Does it Take to Rebound? Event coming up in Toronto

What does it take to rebound?
This question will be unpacked by one of my favourite private equity hires - Tricor Pacific's pick for CEO of one of their portfolio companies - CPI Card Group. The CEO is Anna Rossetti and she has experience in card solutions, microprocessor cards and chips - she will talk about Canadian Tire and other companies too.
Loewen & Partners is putting on this event with Rotman's Womens Programs at Miller Thomson's offices, 5:30, Tuesday 13th. John Turner may be there to open the talk.
Come by to learn more about Rotman's prgrams for women and to talk about private equity with Anna. Rossinni and Jacoline Loewen. The Miller Thomson team will be there and they are helping a wide range of companies. One of the IBK Ivey business plan winners told us that their patent lawyer was Miller Thomson.
Hope to see you.
Jacoline Loewen, author of Money Magnet, Attracting Investors to Your Business