Canadian private equity deals 2010 - 2011

Business Development Bank of Canada(9 deals, $49 million) 
GrowthWorks Ltd. (6 deals, $26 million) 
VenGrowth Asset Management Inc. (4 deals, $14 million) 
iNovia Capital (4 deals, $8 million) 
Covington Capital Corporation (3 deals, $12 million) 
Tandem Expansion Fund (2 deals, $29 million) 
Export Development Canada (2 deals, $13 million) 
British Columbia Investment Management Corporation (bcIMC) (2 deals, $8 million) 

It is not just House saying this

Everyone lies

"Some people will lie to you because they mean to. Others will do it to tell you what you want to hear. Either way, test everything you are told. If someone tells you they are going to invest, get a date. And if the date passes, make sure your spider senses are tingling. If a client tells you he is giving you the order, ask him if it is in procurement yet; if not, then ask him if he minds if you call the purchaser yourself. Test what people tell you. They don't always mean to lie to you, but they do lies," says Robert Herjavec.

Robert is very fair in revealing this basic human need to be liked when face to face. Knowing this given when dealing with people, you can prepare strategies to move the sale forward. It reminds me of a negotiation course I did which taught me no matter what the first offer is, no matter how reasonable, act horrified, make a lot of noise and bring out your inner freak - out. I was returning a leased car and used this technique and was amazed when using strategies brought the final invoice down from a thousand to zero. That's right - zero. Planning your communication techniques works.


Read more in Money Magnet by J B Loewen

Just plan for the worst...

Bring a compass

"'It's awkward when you have to eat your friends.' That's a cute saying I saw a long time ago, but it's very true. When you're starting out, you have to realize that it is going to be bad and then it will be worse than you think. Be prepared to survive the worst situation you can think of — and then assume that things will in fact get even worse than that. Be prepared — it's much better to have a compass to get out of the woods (just in case) than to have to eat your friend to survive," says Robert Herjavec.

OK - so this is a guy thing. I really liked this point though, the more I thought about it. Robert seems callous but he is right that things will get appallingly bad at the worst possible time. Look at the past three years and the economy. 

Investors already know this. That is why they want to know you, the business owner, and your tenacity. Will you have a compass ready just when we are eyeing up each other to see who we will have to kill to eat. It's nothing personal, bro', it's survival..

Read more in Money Magnet by J B Loewen

Try something, rather than do nothing

If they can't catch you, they can't overtake you

"Go fast — really fast. The elephant can't catch a running mouse, but he sure can crush him when the mouse is standing still! When you're small, you got to be faster than the competition. In fact, that's pretty well true no matter who you are these days. So it's better to try something than do nothing," says Robert Herjavec.

The marines did a handbook of strategy which I read back in the nineties and based a great deal of my strategy work around their concepts. The one I debated with many business owners was - make decisions. They may be wrong so make another decision. Those who make the most decisions, win. 

What do you think?





Read more in Money Magnet by J B Loewen

Let's face it, Business Owners

There is no balance

"Your business is a living, breathing thing, and it has to survive, be fed and grow. There is no balance in your life when your business is in trouble. If you are under the illusion that you can start a business and run it at your life's schedule, you are mistaken. The business is like a starving puppy — when it needs to eat, then it needs to eat regardless of what you have going on personally," says Robert Herjavec.

Hey, those who want a balanced life, good for you. Even when business is not in trouble, there is no 'balance' in your life. Big highs, big lows, big highs - wash, rinse, repeat...

Read more in Money Magnet by J B Loewen

A Nation of Takers, Not Makers

Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.
More people in the wagon then pulling the wagon?

Stephen Moore: We've Become a Nation of Takers, Not Makers - WSJ.com

Why the era of top secrecy for the Federal Reserve should end

The US FED is a privately owned bank. It will only disclose what it wants to. 
No-one including the US president will be able to get what info they want out of them. Even the US treasury is run mostly by former Goldman Sachs employees. It's a revolving door. They don't call it Government Goldman for nothing. 
Doesn't matter anyway. All shall be revealed in a few months when QE2 runs out. The FED has become the lender of first and last resort. 70% I'll say again 70% of treasury purchases are coming from the FED. They are in effect printing massive quantities of digital dollars. 
The US is in trouble either way it goes. If QE ends the economy collapses, if they continue, the dollar collapses. The pyramid scheme of money creation is coming to an end.

Why the era of top secrecy for the Federal Reserve should end - Telegraph

Ireland still hasn't fixed its broken banking system – Telegraph Blogs

The larger financial system is still a worry.

Ireland still hasn't fixed its broken banking system – Telegraph Blogs

Business is not easy

Being committed to business is hard

"There is a reason so few companies and people make it: It's not easy. Be honest with yourself. What price are you willing to pay to make the business work and be successful? Would you sacrifice your time, your family, your friends, your golf game, your entire social life? I am not advocating that you should, but you have to ask yourself if you are prepared to," says Robert Herjavec.

This is what my business coach says to me all the time. I agree with Robert - it is the struggle of business that is so hard and to be a good entrepreneur, you must develop that tenacity to keep going. Tenacity is the element of entrepreneurism which although DNA can determine this, you can also be trained to deal with stress and bad times to get back to the more profitable situation.

What business awards should be celebrated?

Awards for business are coveted by many but Tom Deans has a problem with CAFE and the way they celebrate the longevity of a family business. Tom thinks that is giving the worst possible message to family businesses. Even worse, Tom says,

"These awards are like stabs through the heart of family business owners"

Here's more of Tom's view:

It’s time for family business organizations to celebrate something more interesting, positive and inclusive and give awards that put multi-generational wealth creation on an equal footing with multi-generational wealth preservation. And if family business institutions don’t want to go down this road then maybe it’s high time that the M&A industry supported its own set of family business awards.

Here’s my list of new awards for everyone to consider.

1. Liquidity Event of the Year – Inside Sale: Awarded to a business owner who works with his or her children to sell their business inside the family. (I don’t call this multi-generational – I call this a fresh start based on risked capital).
2. Liquidity Event of the Year – Outside Sale: Awarded to a business owner who works with his or her children to sell their business outside the family.
3. Redeployment of Family Capital Award: Granted to the family that reinvents itself by helping the next generation pursue businesses they’re really passionate about.
4. Family Business Philanthropy Award: For the business owner who works with his or her family to use the proceeds of their life’s work to fund extraordinary good works to benefit their community, country and planet.

Read more at Tom Deans Every Family's Business

M&A Activity in Canada

Do Canadians fall apart in the mergers and acquisitions space?  Have they missed getting out into foreign business acquisitions too? Not according to information on performance last year:

Canadian Mergers and Acquisition activity increased for the third successive quarter in Q4 with 302 transactions worth approximately $52 billion.  This represents an increase of 12% in the value of deals announced while the number of announcements increased by 9% over the previous quarter.  The Canadian banks and pension funds announced numerous transactions that contributed significantly towards increased cross-border Mergers and Acquisiton activity and a consistent pace of mega deals (deals valued in excess of $1 billion) in the quarter.

 Some interesting aspects of the Q3 results included the following:

• Four of the five major Canadian banks announced large acquisitions for a total of $14.4 billion; three of the four acquisitions were of foreign businesses.
• Almost all of the major Canadian pension funds announced transactions for a total of 12 transactions worth $8.8 billion.
• Bucking a long-term trend, the value of Canadian-led acquisitions abroad exceeded that of foreign-led takeovers by a ratio of 2.5-to-1
• Activity in the mega-deal segment was unchanged from the previous quarter at 9 transactions; total value of mega deals declined slightly from $28 billion in Q3 to $25 billion in Q4
• The Real Estate, Oil & Gas and Industrial Products sectors were the key drivers of M&A activity in Q4 representing 59% of the overall transaction volume 

For more Mergers and Acquisitions information, please see our website:  http://www.loewenpartners.com/

Entrepreneurial capitalism is the spark behind every important advancement

Did you have a candle lit dinner on Earth Day? I find that gesture just like busy work given for homework, a nice gesture but, hey, let's get doing the real work. I think we should be lighting a candle for every entrepreneur in Canada, not feeling bad that we have power and doing a voluntary black out.
Let's be honest, electricity has been the biggest help to reducing the work load in the home, giving women more time to bring up more educated children. 
I get that Earth Hour is a lovely way to try and raise awareness about being stewards of the Earth, and I am for the idea, but the big dilemma is that electricity is what the whole world aspires to achieve. Doesn't it seem so hypocriticial and contradictory that we turn off what we have for one hour? Being from an African country where power outages were the norm, doing a voluntary power outage seems so...I dont' know...so Paris Hilton.
OK - so what do I suggest instead?
Here is my favourite Greenie talking about the value of electricity, why it is needed and perhaps another way of looking after the Earth without needing to go back to the cave light. He also talks about why 1st world people with our electricity use should not be telling other countries how to be green until we figure it out.

http://www.ted.com/talks/h

ans_rosling_and_the_magic_washing_machine.html


Hans Rosling says, "Thank you, industrialization," he says. "Thank you, steel mill." "Thank you, chemical processing industry." If you listen closely, you can hear the startled laughter of Hans Rosling's audience. 
Some people think these life-altering inventions -- the washing machine, indoor heating, iPhones, are the result of some kind of magic pixie dust. They happened just because. Little elves. Random events. Fate. Anything but the truth.
Which is: entrepreneurial capitalism is the spark behind every important advancement in human knowledge, and is the single greatest reason why people's lives are getting better.
So, on Earth Day, I did the laundry and gave thanks that I am living in Canada. I also lit a candle for every green entrepreneur and linked up a solar entrepreneur with a Private Equity fund who might keep the cash flowing. That early stage solar company is one of the green sparks, one of the entrepreneurs already making a difference, and I want to do what I can to help those business owners. Wow, it is tough keeping the cash flow going. 
I asked Sarah Thomson, who is running as a Liberal candidate and who is a super entrepreneur and who's Facebook got me on this rant:
Sarah, I hope you will push for entrepreneurs to work on the issues brought up by Earth Day. Nothing wrong with a bit of back to the cave, dinner in the dark, as a nice sentiment, but I think that one hour in darkness on Earth Day gesture has run its course. 
Time to speak up to encourage the entrpreneurs in this country. (Liberals seem to only think corporatism.) Please bring back the focus on small business and not just restaurants and stores, which seemed to be the only type and level of business discussed at the Mayors' debates I heard.
On Earth Day, we should be thanking entrepreneurs and asking for their green sparks. And asking, as Government, how can the government get out of the way?
What do you think?

Do you have to be mercenary to survive?

Some South African leaders took advantage of the power they suddenly acquired in the heady days after Mandela's release, as the country moved towards democracy. One religious leader stole from his church and cheated on his wife, a smart TV presenter. She found love again with Adam Kahane who I met in the nineties when I was doing strategy with a fast growing South African bank. Kahane did a superb set of scenarios for the future and the whole country picked up his themes when discussing possible futures and the impact on business.
Now Kahane has published a book on love and power. He certainly saw first hand in South Africa those who used power but without love or respect for their constituents. This balance is something Adam believes is needed in business. Adam works with NGOs and Not for Profits and I know he began in Shell Oil where they did put ethics very high up on their list of values. He manages to articulate this tough balance very well and I recommend his book. Here in Canada, when I think of the senior bank people in TD or RBC, I have certainly seen that blend of patriot more than the mercenary. However, that South African bank where I was working when I met Adam was pure mercenary, and they are now a global bank with a solid bank balance. Their culture has mellowed and I am hosting one of their strategists in a few weeks here in Toronto. They are far from the polite Canadian bank culture but I would place my long term money on the South African, mercenary bank over the nect 30 years.
Here is more on Adam Kahane:

Adam Kahane’s book Power and Love: A Theory and Practice of Social Change(Berrett-Koehler, 2010) opens with a quote from one of Martin Luther King Jr.’s most famous speeches, his last presidential speech to the Southern Christian Leadership Conference. “Power without love,” said King, “is reckless and abusive, and love without power is sentimental and anemic.”

This is a concept that business leaders need to understand, because in times of crisis (and afterward), the people of an enterprise are put under a great deal of stress. Many people in major corporations today are still wondering if they will lose their jobs. A system that follows only the impulses of compassion and solidarity (which Kahane calls love) will lose its competitiveness; a system that follows only the impulses of resolve and purposefulness (which he calls power) will sacrifice its people heedlessly and risk its capability for growth and recovery. A mix of power and love, however, becomes a stance that a leader can hold, and this stance may, in the end, be the single most important factor in enabling a leader to accomplish great things.

 Despite the success of his South African efforts, many participants at Mont Fleur, and in the discussions that followed, found the premise of basing policy on harmony naive. As one African National Congress leader put it, “The only birds that matter here are [not ostriches and flamingoes but] hawks and sparrows!” It turned out that love-oriented solutions are almost impossible to sustain in the predatory atmosphere of any political or competitive power structure. To really make change happen, you need to balance love and power. During the following years, Kahane came to recognize the tension underlying this reality, and to develop some ways to resolve it. That is the basis of the courses he teaches on social change — for example, at the Alia Institute’s annual summer Authentic Leadership in Action program, where he and I are both on the faculty. Kahane sat down with me at last year’s institute, in June 2010 in Halifax, Nova Scotia; he is repeating the course this summer, at the 2011 Alia Institute in Columbus, Ohio.

Want to Pitch Your Company?

Here’s a great opportunity for early stage companies to raise awareness within the Angel and financial community. The Business News Network has a weekly show called “The Pitch”, hosted by the much-loved Andrew Bell.
I was on today at 11:30am, along with Rick Nathan from Kensington Capital. Rick is a great supporter of innovation and ran CVCA.
Quick question: what's the best way to win over BNN's esteemed panel of established venture capitalists and investors? Patriotic messages in Canadian themed greeting cards or the sweet taste of a warm, made to order cookie. Find out on The Pitch.
See Jacoline Loewen on BNN, The Pitch - click here to see the show: 


BNN The Pitch

Cloud Compliance is not that Obvious

We have a guest blogger, Vipool Desai, who is talking about Cloud Compliance. Loewen & Partners has to be compliant to the Ontario Securities Commission and this is a whole new take on the topic:

In the mid 80’s at a time when many small mom and pop businesses were just starting to apply computers in their operations, Apple came out with an endearing commercial:
Two older gentlemen who owned a fish and tackle shop were struggling over set up instructions for a new PC they had just purchased. They had difficulty understanding words like “port” and understanding instructions for installing the software. Finally, in the last scene, their administrative assistant popped her head in the office while the two fellows were still struggling. It was obviously night time by then, as seen through the window of the office. She told them she needed to go home and then pointed out, “at this stage, your computer is going to put us all out of business”. The men look up, dumbfounded.
Thirty years, later technology has advanced to such a stage that most businesses no longer require expensive in-house hardware or software. They just need a fast internet connection to plug into computing power available on the web. Physical servers with installed software are now kept in giant football size mega data centres throughout the world and operated by companies such as Amazon, Google and Microsoft.
Their computing power is available for rent by the month, week, day or even the minute depending on need. This trend, referred to as cloud computing, is now being applied by many global companies. Cloud computing allows operating companies to avoid the three greatest technology costs and challenges;

1. costs of regularly administering internal hardware and software
2. costs of running a business with obsolete internal hardware and software; and
3. cost of regularly updating obsolete internal hardware and software.

If one replaces the words “internal hardware and software” in the above, sentence with “Compliance Policies, Procedures, Forms, Logs and Operating Protocol”, it perfectly encapsulates the cost of compliance for independent firms. The biggest compliance costs are:

1. costs of regularly administering Compliance Policies, Procedures, Forms, Logs and
2. Operating Protocol
3. costs of running a business with obsolete Compliance Policies, Procedures, Forms,
4. Logs and Operating Protocol; and
5. cost of regularly updating obsolete Compliance Policies, Procedures, Forms, Logs
6. Operating Protocol.

Registered firms often mistakenly assume there is a point in time when “compliance is under control”. This could be when their registration is complete, compliance manual updated or when they pass their most recent regulatory review. However, this assumption is as true as expecting that windows 97 is the last application program you will ever need. The effectiveness of a firm’s Compliance Structure will naturally drift due to changes in, regulation, the business, staffing, regulator focus, and industry changes.
For more information, please contact:
Vipol Desai, Ara Compliance info@aracompliance.com.

The challenge for owners to choose between power or money

An owner of a business who gives up more equity to attract co-partners, professional management, new hires, and investors builds a more valuable company than one who parts with little equity. More often than not, however, those superior returns come from replacing the founder with a professional CEO more experienced with the needs of a growing company. This fundamental tension requires founders to make “rich” versus “king” trade-offs to maximize either their wealth or their control over the company.

Owners seeking to remain in control would do well to restrict themselves to businesses where large amounts of capital aren’t required and where they already have the skills and contacts they need. They may also want to wait until late in their careers, after they have developed broader management skills, before setting up shop. Entrepreneurs who focus on wealth can make the leap sooner because they won’t mind taking money from investors or depending on executives to manage their ventures. Such founders will often bring in new CEOs themselves and be more likely to work with their boards to develop new, post-succession roles for themselves. They understand that they can be owners of the business, not managers.

Choosing between money and power allows entrepreneurs to come to grips with what success means to them. Owners who want to manage empires will not believe they are successes if they lose control, even if they end up rich. Conversely, owners who understand that their goal is to amass wealth will not view themselves as failures when they step down from the top job.

This is a profound shift for many family businesses that become trapped believing that only full ownership is acceptable.  These family owners are convinced that having financial partners is a sign of failure. In comparison, the family businesses who do decide to maximize wealth often end up preserving more money for their next generations. Smuckers Jam, Wrigleys, Coke, Thomson all morphed and brought in external partners with great success and longevity for the company but also for family wealth.

Can Goliath Work Like David?

In describing their biggest hiring frustrations, Owners/CEOs often mention hiring someone out of a big company who was not able to adapt to the challenges of a mid-sized company. One Owner recently told me about one of his hiring mistakes – a VP-level hire who had worked at IBM – as follows: “He didn’t know how to create something from nothing. It’s like if you already have a crank, he can crank, but he can’t actually build the crank.”
A big challenge with hiring someone out of a big company is what one Owner called “the resource issue” – i.e., that the person is used to operating with a lot of resources. (“Big company” Goliath was used to having a full complement of armor and weapons, while little David had only a slingshot and the ability to improvise.) Another Owner said, “They have to realize that in a company with $30M revenues, they are the resource. They have to make everything happen themselves.”

QUESTION SUMMARY: In your experience, is it hard for people to transition from big companies to new ventures, or is this issue overblown? If it is hard, what are the biggest challenges, and what are the best ways to address those challenges?

Some big-company people can work well in mid-sized firms. What indicates which big-company hires will work out? The following characteristics were proposed:

• Within the big company, the person has succeeded at a variety of very different jobs across many positions and units, which suggests an ability to adapt.
• The person has had some international assignments, which often demand more entrepreneurial skills than do domestic ones.
• The person has enough self-knowledge to know if she fits better in big companies or in new ventures, and what stage of a new venture’s life cycle would be the best fit. Relatedly, the person is aware that the situation is "radically different" in a new venture, regarding resources, financing, and the need to wear many hats.
• The person is comfortable with the fact that the probability of success is a lot lower in the smaller company.

It may be an overlysimplistic opinion about private equity...

When you give, it comes back - or so the saying goes. I had one of those magical moments when an Ivey MBA student contacted me in regards to the book I wrote to make the Private Equity industry understandable to the layman. Yan Truong took the time to let me know what he got from Money Magnet and I was dazzled:

I have read your book, Money Magnet, and have to say that it was a great read. The book really opened my eyes to another side of PE that I never really understood. I always thought that PE was simply another form of financing for specific start-up companies with the occasional leveraged buyout of non "start-up" firms. However, after reading this book, I realize that financing is really just the tip of the iceberg. I now see PE more as a means to infuse life into a company at every crossroad, whether it is through financing, management expertise or simply giving the firm a new direction or vision. It may be an overlysimplistic opinion, but I see PE as capital markets meets management consulting with a touch of entrepreneurial vigor.

 Yan Truong, B.Eng.
MBA Candidate 2011
Richard Ivey School of Business 

Seems that the EMD has a great deal of value

What is the use of the registration Exempt Market Dealer EMD? After a lengthy discussion, I learnt that there is a long list of reasons the EMD brings value to both business owners and investors, such as reporting in to a regulatory body bringing protection to business owners. Then there are a slew of the hidden benefits for the Canadian economy.

In Halifax, the EMDA held a meeting at Cox and Palmer's beautiful law offices, situated right on the shoreline where military ships sat in the harbor and massive cargo ships slowly pulled into sight, arriving from distant lands. Patrick Fitzgerald, the expert in financially oriented law, was gracious enough to show me around the offices and to view their fine art collection. 
The EMDA event was well worth the trip to Halifax.  It reminded me how fortunate we are to live in this peaceful, safe and secure land. It seems fitting that our business opportunities and transactions offer the same protections to our business stakeholders. 
Canada is attractive as a place to do business because of its high ethics and legal protection. We are moving up in the globe because of registrations such as the EMD.

 The Securities Commission people also presented an interesting presentation, posing questions for the industry. It turned into a fantastically useful debate - still  being resolved over the next few years, mind you. 

I was particularly taken with the thoughtfulness and respect for business owners by the regulators - not the image one often gets from the media. Thank you for that, Nova Scotia!

3 Websites to Ruin Your Day

With American companies and consumers as Canada's prime market base, here are three websites to ruin your day completely: 

http://www.usdebtclock.org/ 

http://www.usgovernmentspending.com/  

http://www.mygovcost.org/ 

Now go and do something you enjoy - you deserve it!

Do Not Confuse Cyclical with Structural

The creator of the Buttonwood column in The Economist flew into Toronto from London to give a wide-ranging speech on the state of the world and how the economics, and investing, would play out over the next few years. Richard Cookson, now with the impressive Citi bank, treated us and scared us by explaining that in the developed world, we have too few assets for all the investment dollars to get the returns that they want. Citi is investing very carefully into the emerging markets but with the Middle East unrest, the risk costs are rising rapidly. 
As Richard says, "Egypt matters as now investors have to add higher risk to emerging markets."
My favourite nugget was Richard's elegant statement, 
"It is a cardinal error to confuse cyclical change with structural change." 
Citi's breakfast speaker series run by  Peter Charrington, CEO, North America, certainly highlighted the details of why we are in a time of great structural shifts. I'm sure Peter would welcome a call for more information. 
Contact: Leslie Bains +1 (212) 559-2216

Now Here's How to Push up Innovation

I am blown away every time I appear on BNN The Pitch by the business owners looking to raise capital. I am impressed with the sheer guts of these entrepreneurs to go on TV, pitch their business and then take a hammering from the private equity people. Their willingness to give it a go is the ability that truly sets apart the wheat from the chaff.
In this show, Matthew Thompson of Protranscript, absolutely nails his presentation and should be able to raise more money than he is seeking with his entrepreneurial drive.
 Andrew Bell introduces the panel: Rick Nathan, Managing Director, Kensington Capital Partners, Stewart Thornhill, Executive Director, Pierre L. Morrissette Institute for Entrepreneurship, Richard Ivey School of Business, Jacoline Loewen, Director of Loewen & Partners.
I apologize for the link below. I wish I could embed the video but I guess BNN wants you to go to their website. So here it is:
http://watch.bnn.ca/the-pitch/february-2011/the-pitch-february-16-2011/

Universities slow to understand private equity's importance

Slowly the universities are beginning to see that private equity is here to stay and is morphing into ever more useful formations. Useful to developing an economy chock block full of entrepreneurial businesses flourishing because they are being fed enough capital by high risk takers, not bankers.
I thought that you may be interested in a source of private equity materials. Wharton's has a new section on its website with PE articles:  Read Here.
The link was sent to me by Leah Noble, CA, JD/MBA and UWO Faculty of Law/Richard Ivey School of Business. Yes, Leah has a a CA and nearly and MBA/law degree combined and a great personality too.

Chinese treat Private Equity like Rock Stars

Watch for China to become the world's center of private equity within five to 10 years, according to David Rubenstein, co-founder of The Carlyle Group. 
Paving the way for this top ranking are strong economic growth, myriad opportunities, little competition and a mostly laissez-faire attitude towards business. The Chinese respect capitalism's power to create a good economy.
David says, "When I'm in Washington, D.C., people are barraging me, saying that I'm not paying enough taxes.... In China, people want my autograph ... private-equity professionals are like rock stars."

How to Explain Your Business Value

Stories or metaphors are easier to understand than fact laden PowerPoints. Here is an example from Mathguy on how to explain something complex to your customer.

http://www.youtube.com/watch?v=_Rl1xgT3REE

Is it Dawn or Dusk for Private Equity?

Private equity investors saw record yearly earnings in the boom years of 2005 to 2008 as easy access to financing led to ever-larger leveraged deals. 
Then it all came to a halt with the global financial meltdown. 
In 2009, PE firms with reasonable liquidity weathered a tough year as many put their portfolio companies through rigorous restructurings. 
This year, talk is slowly turning from retrenchment to opportunity, at least in the U.S. and Asia, however, private equity managers remain concerned about the broader economic environment, particularly in Europe, where the PE market faced further contraction even before the most recent sovereign debt crisis hit.

Advertising companies say demographics are harder to track online

As social media outgrows traditional media, and women users outnumber men, Blakley explains what changes are in store for the future of media.

Business Sales Ramp Up in 2011

Many owners are not ready to sell their business, either emotionally or business-wise. Then a health problem or a bad year forces their hand. Well, the past few years have been a time to cut unnecessary expenses, make ends meet and to patiently wait for the market to rebound.

But 2010 saw a slight improvement in the business-for-sale market and many experts expect that 2011 will be a turning point. Financing options are improving for buyers and banks are putting a new focus on lending.

So, if you're thinking of selling your business this year, here are four tips to maximize your profit

Plan Today for the End 
Steven Covey said "Keep the End in Mind" when planning today, even if it is 10 years away. Like they do for any big purchase, business buyers will do their research before signing on the dotted line. That means it's important for sellers to be ready to demonstrate their business is worth the asking price. Make sure your financial records are kept in order. 

Keep a minimum of three years of documents, including expense records. These are essential to establish buyer trust in the economic history of the business. Over-reliance on one or a few key customers and any outstanding legal issues are actually a target for some private equity firms.

Don't forget the physical elements of the business as well. Tidy up and get done those building improvements such as painting the storefront, cleaning up the distribution facility or re-decorating the interior. The physical appearance is often the first impression a buyer gets, so make sure it's a positive one.

Understand Your Fair Price
To set your asking price accurately, you need to know where you are in the market compared to other businesses for sale. Overestimating your value can lead to a long and difficult sale process, while underestimating will leave money on the table. Expect an improved selling environment in 2011, but don't make the mistake of asking for pre-recessionary prices.

Take a look at your own financials as well. If your business' revenue and cash flow have declined, take that into consideration. Buyers will. 

The downturn is here to stay and looking back at past year's revenues will not make buyers agree that those days will return. The goal is to set a price that will attract the greatest number of serious buyers and enable you to close a deal at the highest possible price.

Market Professionally
One way to get a leg up on the competition and ensure the best possible outcome is to hire an accomplished business advisor. Check references carefully and see if you can find additional references they don't provide themselves. 

Be Prepared To Offer Financing
In today's market, seller financing is essential. That means you may be required to take a minimum of 20 percent of the sale price in the form of a buyer note that the buyer will pay back over time, with interest. This also means that you'll have an investment in the business even after the sale. The buyer and lender will expect you to participate in a successful transition with the new owner and to help get them off to a strong start.

The Sizzle or the Steak?

Putting the building blocks of the business into a plan for investors is one of the top teaching methods for an MBA student. I would heartily recommend the gruelling process to any person trying to be top in their field. It is a realistic teaching method that replicates the stress of presenting your business model and future revenue streams to Bay Street financiers, as well as bringing the defeats which build up business resilience. As John Rothschild, Founder of Prime Restaurants said in the evening during his fireside chat to the room of entrepreneurs, "We all get beaten down and scarred, but we all get back up again."

The Ivey Business Plan Competition is the best in the country at attracting top students from the USA and across Canada. Perhaps it could be the $30,000 prize money, or the added benefit of spending a few days with the best and brightest students as they put in the foundation stone of potential new businesses.  

This year, I had my team at Loewen & Partners look at the four business plans and executive summaries to weigh up which plan they thought was the most fundable idea. I like to read the plans beforehand and compare my team's views with my own. Usually the business plan reflects the best idea and it is pretty obvious which plan and team deserves to go to the finals. 

This year was different. 

The most financially exciting business idea had a well written executive summary, but not much information for the investor. If they were trying to attract an Angel investor for seed capital, they were not building a compelling case for me. Yet, the problem was that their IP technology came out of the hugely reputable Waterloo University, and it was immediately fundable. The judges would all know the government would add in grants or loans.

At Ivey, during the judge’s briefing, we went over how to judge who goes to the finals. Was it based on effort and excellence of the plan or was it based on who I would see getting financing. I was told the winner would be the company most likely to attract investment dollars for their concept today in VC world. In other words, the steak over the sizzle must win.

It was heartbreaking to see my top ranked team get bumped by the weakest presentation, despite the relevant PowerPoint and the carefully crafted speeches. If the weak plan had been presented by a team demonstrating true entrepreneurial vigour, I could forgive the lack of financials.  

That was sadly not the case. 

In the end, the weaker team won because their plan was green tech, which we all knew is immediately fundable by VCs. Anyone see a bubble here?

In comparison, the team who’s work I admired, would not attract funding from a Canadian based VC as it was a start up in China. In my book, Money Magnet, I lay out the reasons VCs and Angels say yes to a business investment, and the first rule is it has to be within 3 hours driving time. China clearly does not fit that rule. If only this excellent team had read the chapter on Angel and seed investing in my book. Barring that, if only they were seeking seed money at a MBA competition in China.

There you have it: the steak had to win. 

The sizzle, although it got my mouth watering, was not enough for seed investors. It is not often that I have judge’s remorse, but the competition left me reflecting on how business success is about being in the right industry at the right time.  I have no doubt, that hard working team will benefit from their effort in the real world. Perhaps, in five years time, maybe we will be reflecting on how a business plan competition spawned a Chinese business success story.

Can Canada ever have one market regulator?

I sit on the Board of the Exempt Market Dealers Association which works with the Ontario Securities Commission to develop regulation of the private placement market. The Board has 21 Directors, most of whom are lawyers. Before you groan, I must rush to say that it is a pleasure working with smart, articulate and often wryly amusing worsmiths, because lawyers are wordy.
The Exempt Market Dealers Association is a national body, even though Canada actually has 13 regulators. Apparantly we are the only country in the world with more than one securities commission, and who is our companion country?
Bosnia! Not great company, one could say.
So What is the purpose of the Exempt Market Dealers' Association?

1. To protect investors from unfair, improper, or fraudulent practices; 
2. To foster fair and efficient capital markets and confidence in those markets.

What do you think of these guiding principals?

• facilitating the reduction of systemic risk, including through monitoring of systemic events or developments and cooperation and coordination with other financial authorities; 
• recognizing that the business and regulatory costs and other restrictions on the business and investment activities of market participants should be proportionate to the benefits sought to be realized;
• maintaining the competitive position of Canada’s capital markets, which is desirable as capital markets are international in character; facilitating innovation in Canada’s capital markets; 
• promoting the informed participation of investors in the capital markets to support effective and responsive securities regulation; 
• recognizing regional markets and sectors.

Value Creation is Changing

The capitalist system is under siege, says Michael Porter, Harvard Business School and the originator of the term Competitive Advantage. Porter talks about how business is a popular choice to play the role of the bad guy in Hollywood and how there is a deluge of opinions about it causing societal problems. Business has tried to take on “Social Responsibility” but this openness and good will seems to have opened up more criticism. Private equity, which has saved thousands of jobs and protected the longevity of companies, is also under fire and being questioned.

This declining trust has caused politicians and market regulators to add more rules and policies to cripple the capitalist system. 

As always, business needs to be the first to step forward in a new direction and look for solutions. Already there are signs that business has been the first to recognize, the business model that worked well ten years ago may now be growing swiftly stale.

One such framework to review is the way business views value creation. It is the short time financial focus in a bubble, while missing customer needs and broader societal influences that determine long term success.

Obviously, those companies who are large enough to have the luxury of participating in round tables and what not, and can take the time to influence and brainstorm the issues. 

Yet in Canada, 80% of company owners run smaller businesses and from the ones I see on a daily basis, they are running on whiffs of fumes. For example, plastic bag manufacturers are having to deal with plastic bags manufactured with logo and all in China and shipped at a tiny cost. How can a small Canadian based company making slim profit margins compete? How can the Canadian government demand more from their taxes, paperwork and health and safety regulations while opening up the door to competitive products not burdened with labour law or higher capital costs?

Secret: Build better products

I valued Ben Horowitz talking about Cloud Technology and how to build a good company. He is so truthful about the 3:00am in the morning fearful meltdowns.
Ben says there is no way to build a new company without a transformational product. What is really important is the product, not the business model, the business plan or hiring MBAs. Innovating and coming up with something way better is key. The big firms have a hard time doing innovation.
Here is Andreeson's other half, Ben Horowitz, taking about how to build a good company. A brief list of Ben's points:

1. When a bankrupt Apple got Steve Jobs back as leader, his new strategy was "build a better product" and it worked. 
2. Skills to win the market are then important. Do you take the market and sell your excellent product?
3. Be a good person as CEO. No one wants to work for a CEO who is a jerk.
4. The key ingredient really is leadership, not management. Leadership is the ability to get people to follow you, if only out of curiosity.

Ben Horowitz was a co-founder of Opsware (formerly Loudcloud), which was acquired by HP in 2007. Earlier, he was vice president and general manager of America Onlines E-commerce Platform division, where he oversaw development of the companys flagship business.

Is Govt Backing of PE Funds Unique to China?

Xie Ping, head of China's Private Equity fund, must be unfamiliar with one of Canada's largest and most influential funds such as OTPP, which was involved in some of the biggest deals in the world. Xie said, 

"China’s private equity industry is unique because it’s dominated by the State and will follow a different path from overseas peers." 

Entities that manage private equity in China and those that invest in such funds are primarily State-owned institutions, China Investment Corp’s Xie said in Beijing.

By having government backing, China’s private equity funds can increase the value of Chinese companies in which they invest, the report cited Xie as saying. This is an aspect of the Chinese market that is different from other countries, he added.The ability to invest directly in private equity is currently limited to a few large State-owned institutions such as China’s national pension fund, the report said.

Bloomberg News reported Tuesday, citing Xie Ping, vice-president at the nation’s $300 billion sovereign wealth fund.

How to Boost Sales

US executives are turning to reality television to repair the battered image of corporate America, turning a show, in which bosses work incognito alongside their most poorly-paid employees into the most successful tool for restoring brand images.

Undercover Boss was responsible for seven of the year’s 10 most effective product placements according to Nielsen, the measurement company, which looked at how well audiences recalled the brand and how much the show improved their opinion of it. Nielsen’s data show a trend towards such extended features on a single company rather than the traditional highlighting of brands in programmes such as American Idol.

"In difficult times, people are interested in watching TV programmes where there is some recognition of the difficulties they face,” says Stephen Lambert, the executive producer behind Undercover Boss and Fairy Jobmother, a UK import about getting the unemployed back to work. “At a time of great insecurity people like watching shows where people end up in a better place.”

Undercover Boss typically ends with the executive setting up a health scheme or taskforce, and rewarding employees with scholarships, holidays or, in one case, a 7-Eleven franchise.

Read more at Financial Times 

Sir James Goldsmith talks about outsourcing to China

Twenty years ago, Sir James Goldsmith talks about how America will kill its own economy. It is quite horrifying hearing Goldsmith accurately predict today's situation as Clinton's trade agreement GATT gets implemented and the long term consequences unfold. Goldsmith talks about how jobs will get obliterated as they are exported from America and the number of jobs reduced sharply.
Goldsmith asks,"What is the purpose of an economy?" He says it is there to serve the needs of society - prosperity and stability. He adds, "Material wealth would solve our problems and we achieved that. We have destabilized society because the economy is no longer serving us."
"Who benefits from these trade treaties? Major corporations benefit. What is good for GM is good for the USA is no longer true. They are no longer linked to the USA. They farm out their production wherever they can get the cheapest capital and labour."
Charlie Rose is stunned at the suggestion that automobile manufacturing or technology industries would move out of America. I would enjoy Charlie Rose doing a "Stupid Things I Said in the Past 20 Years on my Show." This show is almost painful to watch as a wise entrepreneur who can see the patterns of industry tries to get across his correct vision of the outsourcing of American jobs. Clinton's spokesperson does not listen and just shouts him down. She ran the London School of Economics and boy, if this is the type of "thought leader" leading our universities, the type that refuses to listen but shouts down the opponent, it is not a good trend.
Clinton's aid says. "When American jobs are moved abroad, they add jobs here too."
Goldsmith points out that new jobs are part time and lower skilled. This was back in 1992. We have seen that real income has not risen since 1992. Goldsmith saw the future, here is the interview: