What Extras Helped Those Who Rose to Leadership?

Why take the time to meet new people and introduce them to others in your network?
High achievers don't turn into leaders, even if they seem to have the right skills, without the power that comes from going beyond the letter of the job and doing what Harvard Business School professor, Moss Kanter, calls "The Extras". 
One that caught my eye is  being a connector. Malcolm Gladwell explored this skill set in his best seller, Blink, and explains why it makes such a huge difference in rising up the business ladder of influence and success. Here's Moss Kanter's comment on being a connector:

Opening doors. Power to the connectors! Those who rise to leadership keep their virtual Rolodex rolling. They know enough about others to spot something of interest to them and pass it on, opening doors or making key introductions. In the new networked companies, connectors are the go-to people, the must-haves at meetings. The effects are viral. The more they connect, the more connections come to them.

5 Thoughts to Help Entrepreneurs

Why are the big AHAs of entrepreneurs who kept it going so meaningful? When this recession hit like Hurrican Katrina, we all need voices ahead of us to keep us going. Here is a great list of 5 quotes by Om Malik.

As an entrepreneur, one gets to get too preoccupied with the tactical stuff on a daily basis. So much so that we miss the big picture. In many ways, that is the single biggest mistake we make. When thinking about the big picture, we need to remember a few things. Here is a short list of some of the words of wisdom that have been helpful to me in the recent few weeks. 

• “I don’t think about my business so much in quarters or in numbers that way. I think about getting the product right.” Designer/Founder, Eileen Fisher
• “The main thing is to keep the main thing, the main thing.” Jim Barksdale, CEO, Netscape.
• “What you start your business to be, and what it becomes, are almost never the same thing”Danny Shader, Founder & CEO PayNearMe. Ex-CEO Good Technology and Accept.com
• “You can be what you want to be or, you can be what you are expected to be.” Mad Men, Season 4.
• “Don’t be self conscious about being an entrepreneur.” Tim Westergren, founder Pandora

4 Leaders every team needs

Owners of companies can be very touchy at being boxed or labelled, yet since Aristotle, humans have been put into 4 categories. Here is Paul Maritz, president and C.E.O. of the software firm VMware, a former leader of 10,000 people at IBM chatting about his 4 types he wants on all the teams he manages.

I think that in any great leadership team, you find at least four personalities, and you never find all four of those personalities in a single person.

You need to have somebody who is a strategist or visionary, who sets the goals for where the organization needs to go.

You need to have somebody who is the classic manager — somebody who takes care of the organization, in terms of making sure that everybody knows what they need to do and making sure that tasks are broken up into manageable actions and how they’re going to be measured.

You need a champion for the customer, because you are trying to translate your product into something that customers are going to pay for. So it’s important to have somebody who empathizes and understands how customers will see it. I’ve seen many endeavors fail because people weren’t able to connect the strategy to the way the customers would see the issue.

Then, lastly, you need the enforcer. You need somebody who says: “We’ve stared at this issue long enough. We’re not going to stare at it anymore. We’re going to do something about it. We’re going to make a decision. We’re going to deal with whatever conflict we have.”

You very rarely find more than two of those personalities in one person. I’ve never seen it. And really great teams are where you have a group of people who provide those functions and who respect each other and, equally importantly, both know who they are and who they are not. Often, I’ve seen people get into trouble when they think they’re the strategist and they’re not, or they think they’re the decision maker and they’re not.

Letter of Intent Sample That Watches for Bear Traps

The Letter of Intent for Merger and Acquisitions is a document between a purchaser and a seller used to outline the initial terms of a merger and acquisition transaction between two companies. The Letter of Intent Sample details the purchase of stock, price, closing date, etc. and often helps streamline negotiations when the transaction is complex. This document is essential for protecting your interests during negotiations.

Private equity accessing debt again

Private equity is using debt again. While it is harder to get a home loan or small business loan, large companies and private equity, established players can access cheap bank debt. The US is showing how with its large players - Carlyle and Blackstone. There is a radically different view by each of these giants, but I believe that shows the health of PE and its ability to bring different views to their business. Take a look:

Blackstone, in reporting a 23 percent jump in third-quarter earnings, said it had found the market to buy out companies unappetizing. “There are some good companies being sold, but we just can’t get to the prices that are required,” Hamilton E. James, the company’s president, said Thursday morning.

Carlyle, though, is gobbling up companies. Not long after Mr. James’s bearish comments, Carlyle announced a $2.6 billion deal for Syniverse Technologies, a voice and data services provider for telecommunications companies. On Wednesday, it completed a $3 billion takeover of CommScope, a maker of telecommunications equipment.

The divergent approaches highlight how cheap corporate debt is fueling the recovery of the private equity business. While it remains difficult to get a mortgage to buy a home or to get a loan to fund a small business, yield-starved investors are creating a robust market for corporate bonds and loans.

Private equity firms are seizing upon the corporate-debt boom in myriad ways. For the debt-heavy companies they already own, Blackstone and Carlyle are improving their balance sheets through aggressive refinancing. Corporate loans are now available to do multibillion-dollar buyouts, too, but the easy lending environment has created fierce competition for takeover targets, driving up prices. The corporate loan market “is almost hard to believe,” Mr. James of Blackstone said.

Private equity’s outlook is certainly brighter today than it was one year ago. Buyout firms have made $173 billion worth of deals this year, up 95 percent from last year, according to data from Thomson Reuters.

Blackstone, co-founded by Stephen A. Schwarzman, may be reluctant to do deals at the moment, but its earnings report underscored just how favorable the environment has become. The New York-based firm, with $119 billion in assets under management, said its third-quarter profits were bolstered by sharp increases in the value of its real estate holdings.

Public companies have become enslaved

Top Silicon Valley player, Gordon Davidson, says that tech companies should drop the IPO goal and focus on private equity and staying as a private business. Davidson is the lawyer behind the mega deals of the past so his views are important to note. Let's look at his reasoning:

The soft-spoken Davidson, chairman of powerhouse law firm Fenwick & West, has had a hand in more than 100 mergers and acquisitions and some 30 initial public offerings — most of them in tech. He's also a lawyer for Cisco Systems, venture firm Kleiner Perkins Caufield & Byers and others.

So it's a bit shocking to hear him downplay the importance of tech IPOs today. For proof, he cites Facebook, Zynga, Twitter, Yelp and others: None is in a particular hurry to sell shares via the stock market.

"Good companies can go public in any market," Davidson says. "Today, it is easier to be a private company than a public one." Public companies "have become enslaved by the expectations of analysts and shareholders," he says.

Those forestalling public offerings are older, better-known companies that have yet to be enticed by a recent uptick in tech IPOs. For older start-ups, a new breed of private-equity investments are an attractive substitute, especially in the face of the weak advertising market that so many social-media companies depend on for revenue.

Such investments in late-stage start-ups such as 6-year-old Facebook, nicknamed "DST deals" — after Russian investment firm Digital Sky Technologies, which started the trend by funneling tens of millions into Facebook and Zynga — are a recent phenomenon. The money goes to buying shares owned by employees or early investors.

The strategy has been accentuated by several crosscurrents: the lingering effects of the worst bear market since the Great Depression; readily available private equity, in the form of investments by firms such as Andreessen Horowitz and DST; and the costs of complying with public company regulations such as the Sarbanes-Oxley Act,which established new standards for boards, management and accounting firms following accounting scandals at Enron, WorldCom and others.

"It is undeniably harder to be public today than 20 years ago," says Bill Gurley, a partner at venture-capital firm Benchmark Capital.

Consumer spending data is misleading for Canada

With Canada's GST and HST, Economist Michael Mandel's article Consumer Spending is *Not* 70% of GDP may not completely apply. Mandel does go through why shopping is not the be-all and end-all, he also explains the apparent discrepancy between retail sales and consumer spending. Let's take a look.

I opened up this morning’s NYT and see the big headline “Retailers See Slowing Sales in a Key Season.” And I just know that we are about to have another round of “consumer spending is 70% of gross domestic product, so blah blah blah blah of course we can’t recover unless consumers start spending again.” (Not in the NYT story, to their credit, but you can find similar quotes everywhere you look).

Blah blah indeed. As a textbook author, there are few things that frost me more than hearing “consumer spending is 70% of gross domestic product,” because it perpetuates two very large and very misleading untruths.

First, the category of “personal consumption expenditures” includes pretty much all of the $2.5 trillion healthcare spending, including the roughly half which comes via government. When Medicare writes a check for your mom’s knee replacement, that gets counted as consumer spending in the GDP stats.

At a time when we are wrangling over health care reform, it’s misleading to say that “consumer spending is 70% of GDP”, when what we really mean is that “consumer spending plus government health care spending is 70% of GDP.”

Second, an awful lot of those back-to-school dollars are going to imported clothing and school supplies (how many of those laptops and iPods do you think are made in the U.S.?). A dollar of consumer spending does not translate into a dollar of domestic production.

In fact, the whole way that the BEA presents the GDP statistics points the public debate in the wrong direction. GDP stands for “gross domestic product”—that is, domestic production. But the breakdown of GDP is into expenditures categories—personal consumption expenditures, government consumption expenditures, etc.

I think we need to move towards presenting GDP in terms of production, rather than spending. We need a shift from the consumer to the producer as our main unit of analysis.

But for now, we need to stop being so darned obsessed with consumer spending.

Citi selling Private Equity to Stepstone

Stepstone Group LLC said Wednesday that it has closed its acquisition of $4 billion private equity funds from Citigroup Inc. (C) as the investment bank seeks to offload its alternative assets units ahead of U.S. new financial rules discouraging banks from engaging in risky trades with their own money.

Financial details of the transaction weren't disclosed but the package includes fund of funds, mezzanine and co-investment businesses.

A voting machine for good businesses

"The public market is a voting machine in the short term, weighing machine in the long term," said Randall Abramson, Trapeze Asset Management. This quote came from one of Randall's favorite economic experts, Benjamin Graham, who was also one of Warren Buffet's mentors. Randall was going through his company's rational for investing, and running a demonstration of their extraordinary algorithm which made sense. Showing Disney's stock journey over the past few decades, gave a compelling snapshot to back up Randall's view that good investing is about value and digging deep to find undervalued companies. There were many opportunities to buy a seriously undervalued Disney stock and other times when the stock was too over priced to be an attractive investment.
The message was clear: fickle public opinion does not out perform the long term value of a business.
The public market has been a voting machine for future success, based on the talent and innovativeness of the management team and their employees and resources. The long term focus has been damaged though, as bubbles hammer good companies who do not deserve to have their stock reduced due to the foolishness of other businesses forgetting good business practices. The crash hurt sensible, wise investors with its sudden plunges.
This volatility of stock price, which is mostly out of the control of management, is the number one reason given by CEOs for frustration with public markets. Harvard reported that 88% of CEOs preferred running a private business without the pressure.

Jacoline Loewen, author of Money Magnet: Attract Private Equity Investors to Your Business

Succession Planning Should Focus on Selling the Business

Less than 3% of family businesses make it to the third generation. That arresting factoid prefaces Every Family’s Business, a book dealing with succession planning for family businesses. In this book review by Canadian Business expert, Larry MacDonald, he reveals how the author, William Deans, draws on a wealth of personal experience: he is a fourth-generation businessman and ran his father’s 250-employee chemical business for ten years prior to its sale. MacDonald says:

This remarkable book is written in the dialogue style of David Chilton’s The Wealthy Barber. It was first released in 2008 and has sold over 100,000 copies so far. Deans himself is much in demand and has done over 300 presentations around the world. He operates out of Hockley, Ontario and has a website at www.everyfamiliesbusiness.com.

When it comes to succession issues surrounding family businesses, most books and advisors deal with how to transfer control to younger family members. But Deans thinks the focus should instead be on selling the business at fair value whether it is to family or non-family. 

I would add in here that you can sell to private equity either fully or staggered over five to twenty years.

This sale will all chips off the table and not only assures a more secure retirement for the owner but often leaves behind greater wealth to distribute to heirs. MacDonald says:

Many business owners want to hand over their beloved enterprise on easy terms to children as an act of love or because they wish to leave their business behind as a legacy. But for a variety of reasons, as discussed in Every Family’s Business, the transfer often leads to acrimony and dysfunction within the family. It can also culminate in insolvency or a sale at a low price to a non-family buyer.

Read more Here

Why today’s investors must think globally

History reminds us that no nation ever pays off its debts outright, and that all government debt is eventually – and inevitably – inflated away.
It may be quiescent for now, but to ignore the time-bomb of inflation is to do so at one’s own peril. It’s a risk that could well be reflected in an ever-rising gold price (currently over U.S. $1300 an ounce, and counting), as well as an ever-sliding (and cheaper) U.S. dollar.
The U.S. dollar, the world’s reserve currency, keeps on sliding despite the pressures on China to lift the value of its yuan and a growing groundswell of foreign currency posturing.
The latent inflation risk is another reason why investment strategies must remain focused on equities. Besides, it’s invariably better to be an owner than a debtor and to have interest (and dividends) payable to you rather than by you – and ever more so now.
Adding to the case for being an owner rather than a loaner is a global economy being slowed by the U.S. but offset by a burgeoning new world order led by Asia, Latin America, BRIC (Brazil, Russia, India and China) and other rising powerhouses.
There’s also China’s ever-lengthening investment clout, witness Potash Corporation of Saskatchewan contemplating a Chinese white knight to rescue it from the hostile (and underpriced?) clutches of BHP Billiton? It’s but one more example of why today’s investors must think globally.
In Europe there’s encouragement too, despite nation-wide strikes in France and intensified payback stresses in Greece, Ireland, Iceland and others.
In Britain, the determination of David Cameron’s new coalition government to get on top of its huge debt and deficit problems remains especially noteworthy. One respected English friend writes: “The majority of the British people know that the problem must be addressed now and will back the government against an overpaid, overprotected and quite often bone-idle public sector”. Another comments on how many UK companies have come through the recession surprisingly well and have sustained earnings better than might have been expected.

You can never count the U.S. out

Tony Boeckh (of the Bank Credit Analyst) puts the case for today’s America best: “It’s got a trillion-dollar deficit monkey on its back, its consumers have been gutted, its housing and banking sectors could take years to recover, and its currency is a dog…. You can never count the U.S. out – it has an incredible ability to rediscover itself and rejuvenate.”

Deloitte reports Private Equity's Confidence

Private equity is stepping up and getting the results where the public market lags. A report from Deloitte goes on to explain:

 There is still confidence and optimism among private equity fund managers (GPs), according to the latest Mena Private Equity Confidence Survey released by Deloitte. The annual survey, conducted for Deloitte by Arbor Square Associates, is designed to measure confidence and market sentiment in the private equity market.

read more

Jacoline Loewen, Private Equity expert and author of Money Magnet.

4 Lessons from Physics for Marketing

Marketing and physics do seem a natural combination but here is a talk by Dan Cobley, a physics expert, on 4 lessons marketing can draw from the common laws of physics.

NI 31-103 is a really bold change

Individuals and firms who distribute exempt-market securities are scrambling to meet the new requirements they’ll face beginning Sept. 28. In fact, some are even moving out of the exempt-securities realm altogether as they assess the drastic regulatory reforms associated with National Instrument 31-103.

The new regulations include widespread changes for exempt-market dealers. EMDs include those who distribute prospectus-exempt securities such as hedge funds, principal-protected notes and limited partnerships, as well as those who work with accredited investors. 

“This is the one area of NI 31-103 that is a really bold change,” says Geoffrey Ritchie, executive director of the Toronto-based Exempt Market Dealers Association of Canada. “It’s a huge transition.”

Most of NI 31-103’s new regulations came into effect on Sept. 28, 2009. However, existing EMD firms and reps had one year to comply with some of the requirements. Regulators are warning that registrants who fail to meet the looming deadline could face immediate suspension until they comply.

For firms dealing in exempt securities, the upcoming deadline includes new capital requirements, beefed-up disclosure rules and new filing requirements for financial statements. Dealing reps at these firms, meanwhile, face new proficiency requirements under which they must successfully complete either the Canadian securities course offered by Toronto-based CSI Global Education Inc. or the more specialized exempt-market products course offered by the Investment Funds Institute of Canada’s IFSE Institute. 

Chief compliance officers with EMDs are also required to complete one of these two courses, along with either IFSE’s officers, partners and directors course or CSI’s partners, directors and senior officers course.

The new proficiency requirements are intended to protect investors, according to the Ontario Securities Commission, by ensuring that reps who deal with the exempt market meet minimum qualifications.
Find out more about the Exempt Market Dealers Association http://www.emdacanada.com/

Big, greedy drug companies don't do any research

Innovation seems to be thought of as something that just happens - shezaam, eureka. The head of Government Health in South Africa back in 1994, demanded that the greedy pharmas hand over their drugs at cost and went on to berate corporate drug companies. That health minister is now dead but the argument about greedy pharma continues. Derek Lowe has something to say to the folks who claim that all the "real" research on pharmaceuticals is done in universities, and drug companies just steal

Allow me to rant for a bit, because I saw yet another argument the other day that the big drug companies don't do any research, no, it's all done at universities with public funds, at which point Big Pharma just swoops in and makes off with the swag. You know the stuff. Well, I would absolutely love to have the people who hold that view explain the PPAR story to me. I really would. The drug industry poured a huge amount of time and money into both basic and applied research in that area, and they did it for years. No one has to take my word for it - ask any of the academic leaders in the field if GSK or Merck, to name just two companies, managed to make any contributions.

We did it, naturally, because we expected to make a profit out of it in the end. The whole PPAR story looked like a great way to affect metabolic disorders and plenty of other diseases as well: cancer, inflammation, cardiovascular. That is, if we could just manage to understand what was going on. But we didn't. Once we all figured out that nuclear receptors were involved and got busy on drug discovery on that basis, we didn't help anyone with any diseases, and we didn't make any profits. Big piles of money actually disappeared during the process, never to be seen again. You could ask Merck about that, or GSK (post-rosiglitazone), or Lilly, or BMS, or Bayer, and plenty of other players large and small.

No one hears about these things.  We're understandably reluctant to go on about our failures in this industry, but the side effect is that people who aren't paying attention end up thinking that we don't have any. Nothing could be more mistaken. And they aren't failures to come up with a catchy slogan or to find a good color scheme for the packaging - they're failures back at the actual science, where reality meets our ideas about it, and likely as not beats them down to the floor.

Honestly, I don't understand where these they-don't-do-any-research folks get off. Look at the patent filings. Look at the open literature. Where on earth do you think all those molecules come from, all those research programs to fill up all those servers? There are whole scientific journals that wouldn't exist if it weren't for a steady stream of failed research projects. Where's it all coming from?

What is happening to entrepreneurial businesses

My partner and I own a successful e-commerce website. We started it in the late 1990's by ourselves and now we have five employees. Our growth came from personal resources, as well as credit card lines. Each year we saw sales increases of at least 10-20%. However, in late 2008/early 2009, we started seeing our sales slipping. As a result (and watching our competitors) we lowered our on-line prices to continue to drive sales. As of today, our prices are 40% below where they were in 2008. However, we have the same number of customers - we just work a heck of a lot harder!

On the negative side, we saw all of our credit card lines cut, so we can no longer use them. Bank financing is completely out as we have no business assets so to speak (our business is online - not manufacturing). We have cut costs by moving to a cheaper office location, letting one employee go and demanding lower prices from our own suppliers (mostly successful). As a result of our cost cutting, our bottom line has only slipped 10%. We feel very fortunate in this regard.

As to what would help our small business grow and hire people again - simple; more sales! We do NOT need to borrow more money as we already owe enough and our capacity is only at 50%. So what would we borrow money for? More production? We don't have the sales.

So QE actions by the Fed have no effect on us. Interest rates could go to zero and it still would not matter. What we are NOT seeing are credit card rates going down - now THAT might help us somewhat. Regardless, it seems that the economists in charge are playing from the old handbook of everyone borrowing money to spend money. Needless to say, it's not working - but you already knew that. Thanks again and keep telling the truth.

Danny
Austin, Texas

Will Canadian Firms Size-Up Enough?

In the past year, many company owners have contacted me to sell their companies. They do not have anything near the value they expect. Why is there such a gap in expectations?
First and biggest reason for the gap is if your company is under $20M in revenues, this greatly reduces your universe of potential buyers. This smaller size also means you get an immediate steep discount on your end sale valuation. Investors with the money are seeking companies with operating revenues over $20M, and if you are under that amount, your asking price drops off the cliff.
Canadian companies are small and conservative. Many are family owned and do not wish to risk growing organically or by acquisition. I do not blame them, but they must see the game has changed. Right now, we are global. It means you have to think global and that means get bigger than $20M. I have had this conversation with many family business owners and it is not necessary. If they got in private equity partners at 30% ownership, they would get money out for their family and get on with growth. Their second sale would be worth far more.

Exempt Market Dealers Have Business Trigger

Canadian securities legislation creates two categories of securities that may be sold: 

(i) prospectus securities; and 

(ii) securities issued under prospectus exemption. 

Securities issued under the prospectus exemptions, otherwise known as non-reporting issuers, are typically considered to form the "exempt market". 

Under NI 31-103, a new dealer registration category is introduced in all jurisdictions across Canada to regulate the sale of securities in the exempt market - the exempt market dealer (EMD).

A critical change under NI 31-103 is the introduction of the "business trigger" for dealer registration. Prior to September 28, 2010, the requirement to be registered as a dealer is triggered by a person engaging in a "trade" of securities. With the new rules introduced in 31-103, the "trade trigger" is replaced with a "business trigger", so the dealer registration requirement will only apply to those whose trading in securities amounts to carrying on the business of trading in securities. Companion Policy 31-103CP provides guidance on what acts are deemed to be sufficient to trip the "business trigger".

NI 31-103 introduces consistent rules concerning proficiency, conduct, capital and compliance requirements and makes it clear that EMDs are subject to the same know-your-client ("KYC") and suitability requirements as other dealer categories.

Quick Facts about the EMD

The Exempt Market Dealer - known as EMD - category replaces the LMD category, making the EMD registration category uniform across the country.
Did You Know?
o Existing LMDs automatically become EMDs on September 28, 2009. You don’t have to apply.
o EMDs have capital and proficiency requirements. LMDs had none.
o Not all LMDs will require registration as EMDs under NI 31-103. It’s up to you to make the determination.
o The EMD registration requirement will apply differently in certain parts of the country.
These and other important changes in the regulation of the exempt market under NI 31-103 are discussed below in this issue.


Visit the Exempt Market Dealers association for more information: http://www.emdacanada.com/

3 Hottest Technologies for Investors

Those Harvard Business Review articles telling you how innovation works in big corporates are yesterday's news. Companies like Google, IBM, Oracle and Cisco have massive war chests to buy innovation, not grow it in their own company.
The good news is that Canada is chock full of innovators in technology doing great companies that are being bought by the large corporates for big bucks.
So see if you have one of the 3 specialties to attract investors.
3 Investor Target Technologies
1. You have Real Time Data. for example, a customer goes to a bank to withdraw cash at the ATM but is low in funds. The software checks out his business, his mortgage, his past record and decides to up hs credit for $2,000 as he has a great track record. That's real time data working to make more money.
2. Data Ownership. Thomson Reuter has rights to their data and they are deep and industry specific with their data.
3. Span or Connect the Enterprise. Risk management and compliance are the hottest words out there. One way to reduce risk is to make sure it applies across the entire company. So any technology that can reach across the entire enterprise, end to end is appealing.
Any of the above 3 will get investors itching to invest in your technology company.

Jacoline Loewen, expert in Private Equity, author of Money Magnet: Attract Investors to Your Business.

Private equity grew company at rate of return of 127%

Yellow Point’s investment in May 2005 generated an internal rate of return of 127% and a multiple of 8.5 times invested capital, when the company was sold to Tricor Pacific Capital in December 2009. David Chapman, Managing Partner of Yellow Point and Terry Holland, a co-investor in CCI and a Yellow Point LP, accepted the deal of the year honour at the CVCA's AGM Dinner in Toronto on Tuesday, September, 2010. Dave said:

“We are pleased with the successful sale of CCI Industries. The sale was truly a win-win for everyone involved. We would like to thank Bruce Clark and Norm Duplessis, co-founders of CCI, for the opportunity to partner with them on this investment. We would also like to thank Terry for his value-add contribution to the CCI board. But most of all, we would like to thank Martin Bates, CCI’s CEO, for his leadership, strategic guidance and stewardship of the business. We brought Martin in to lead the business shortly after our investment in 2005, and he did a phenomenal job growing the business and building value for all stakeholders. We are also pleased that CCI continues to be in very capable hands. Tricor is a class organization and will do great things in taking CCI to its next level of success.”

I agree that Tricor is a good private equity firm. Anna Rossetti is their professional CEO for PCI Cards and she is a firecracker.

About CCI Industries

Headquartered in Edmonton, Alberta, CCI Industries is the world’s largest producer of Allan Block garden, landscape and retaining wall systems and AB Fence products, having sold over 60 million square feet across Western Canada and Washington State. It is also Western Canada’s largest manufacturer of innovative and competitively-priced concrete masonry products having sold over 300 million square feet.

About Yellow Point Equity Partners

Yellow Point Equity Partners is a Vancouver-based private equity investment firm specializing in management buyouts and growth investments for mid-market companies. It invests in and partners with outstanding management teams of later stage private companies with the goal of building shareholder value over the long-term. It aims to be the partner of choice for management teams of Canada’s leading private companies.

Covington Deserves the CVCA Award

Covington Capital Corporation has won this year’s venture capital category award for its investment in SXC Health Solutions Inc., Canada:
“Covington first invested in SXC Health Solutions Inc. in March 2001, and upon exit in July 2010, the investment generated an internal rate of return (IRR) of 38.7% and a multiple of 13.3 times original investment.” The CVCA would also like to congratulate Canadian Medical Discoveries Fund (now GrowthWorks) for their co-investment in SXC Health Solutions Inc.
The honour was accepted by Phil Reddon, Managing Partner, Covington Capital and Jeff Park, CFO of SXC Health Solutions, at the CVCA’s AGM Dinner in Toronto on Tuesday, September 21, 2010.
“Covington’s involvement in SXC ran very deep over a 9 year period as an investor in SXC. Covington has not only been a provider of investment capital, but also a valued strategic partner and active Board member. . Since our investment, SXC has grown from a small Ontario software provider to the Canadian healthcare industry to a solidly positioned, multi-national corporation with estimated 2010 revenues of U.S. $1.9 Billion” stated Mr. Reddon.
“Successes such as these underscore the importance of venture investors in supporting growth and innovation in Canada,” added Phil.

Will Nouriel Roubini's Advice on Payroll Cuts Help?

Nouriel Roubini is giving links to his Wall Street movie cameo - seems awfully vain to me. I saw Paul Krugman on Bring me the Greek last night. What is with these economists...are they are going gaga? Nouriel and Paul may believe they are mainstreaming their subject, and I agree, we all have to move with the social media times, but Tweeting about yourself on the movie too? Come on, Nouriel, you're not Hollywood.
Here is Mish's comments on  Nouriel's latest ideas in Response to Nouriel Roubini on "America Needs a Payroll Tax Cut" Mish also gives a great email from the president of a small corporation adding his comments too. Now this is worth Tweeting, Mr Roubini:

Dear Mish: I agree with your analysis of the statements by Roubini re: payroll taxes. As a business owner with four employees, I’d welcome them; however, such breaks would not entice me to hire another employee. Have a good day.

Here is Mish's response which is exactly right:

I am quite certain that sentiment represents the vast majority of small business owners. The one thing small business owners need is customers. It's hard to get more customers when government is going to start taking a bigger bite out of everyone's pay check. This is further proof that Congress has those bills ass backwards. But hey, who cares if the economy goes to hell. After all, scoring political points is far more important!

Catch more of Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Is the US Turning Japanese?

Is the U.S. sliding into a long-running Japanese-style deflation?
After two decades Japan still struggles to deal with the deflationary effects of the sustained collapse of its real estate and financial markets in the early-1990s. So much so that China recently bumped Japan as the world’s second-largest economy in GDP terms.
To add to these persistent ongoing worries the yen has been showing unwelcome latest strength against the U.S. dollar. As a result, the once-mighty Tokyo Nikkei stock market index has again pulled back steeply and remains mired far below its peak levels of way back then. Prosperity without growth is not a pretty prospect.
Another mounting worry is of America’s ever-growing reliance on foreign debt to finance a federal deficit currently in the order of $1.5 trillion, or 10% of GDP, and counting.
In March, when I last walked past the National Debt Clock in midtown Manhattan, some one-third of the $12 trillion-plus U.S. Treasury debt (equivalent to almost 80% of GDP) was owned by China ($900 billion), Japan ($800 billion) and other foreign creditors. These holdings might well have been reduced since then. And what if this were the beginning of enough being enough? When do troublesome trends like these stop, and how should they be reversed?

The US and UK Approach to the Economy - which is right?

Worries of a “double dip” recession are not to be taken lightly. And neither the risks associated with unprecedented levels of debt sparked by lifesaving, over-the-top government stimulus and deficits and debts of all types (including household and consumer) that could well have reached dangerous tipping points.
Whereas two years ago the worries centred around the bail-out of banks, financial institutions and enterprises judged too big to be allowed to fail (e.g. “Government Motors”), this year’s focus shifted to the public sector as sovereign debt risk (epitomized by Greece, maybe also Ireland) came to occupy centre stage. And, with it, how the G8 and OECD nations, in other words the developed world, tackle disorders that could have reached explosive proportions.
The dichotomy between the fiscal approaches being taken by the governments of the U.K. and the U.S. couldn’t be greater, the one resolving to tackle its formidable deficit and debt problems head on, the other to keep the spigots open in order not to risk jeopardizing a fragile economic recovery.
Symbolically, David Cameron, the youthful new British Prime Minister, flew commercially on trips to Toronto for the G8/G20 meetings, and to New York to address the UN. From New York he took the train to Washington to meet President Obama. In between, his “accidental” coalition government (The Economist) brought down the harshest kill-or-cure budget in generations. Its aim – to eliminate a record deficit within five years through a combination of severe fiscal tightening (public service cutbacks and pay freezes, et al), higher consumer taxes (e.g. VAT to be raised to 20% from 17.5%), levies on banks, an increased capital gains tax and other private sector measures.
“When we say that we are all in this together, we mean it”, said George Osborne, Britain’s youngest-ever Chancellor of the Exchequer. Echoes of the Thatcher years are unmistakable. Times and circumstances may be different today, but a British “disease” of a different type could be taking hold as a wave of austerity begins rolling across a debt and deficit-heavy Europe. (Mr. Cameron and EU leaders might also like to note how Stephen Harper of Canada has managed to govern effectively for four difficult years with a minority government.)

Business owners need to feel they are in a dynamic market place

Castro says that his economic model is not working too well. He confessed this to an astounded journalist who probed deeper. Castro clarified further that the government took up too big a role. (Trudeau - what did you think when you were swimming in his pool as a guest?)
Business owners definitely need to feel that they are in an exciting economy, not squeezed out by government. Sometimes Canada can slide over to the Castro approach and the UK has been at it for decades, forcing my parents to immigrate.
Although everyone thinks of the UK as Europe's free market laissez-faire poster child, nothing could be further from the truth. Britain is in fact the only major democracy to have flirted with full-scale Soviet communism. 
It is often forgotten that after the war the British government confiscated the assets of most of Britain's industrialists. In 1946 the government nationalised the entire coal industry; that was quickly followed by the State confiscation of the railways, the electricity generating companies, all the country's hospitals, the telephone company, the gas companies, the entire iron and steel industry and all the shipbuilding yards. My grandfather was head of one of the ship building unions that crippled the industry and he was always telling us the business would return. It never did and the skills were lost for ever.
And then in a final coup de theatre the bulk of the country's car industry was also brought into State ownership. 
No other country in Europe embarked on anything like the scale of Britain's experiment with communism, and none experienced such disastrous results. All of the nationalised industries, without exception, fell into a death spiral of inefficient operations, militant unionism, high costs, poor quality, rubbish customer service, abysmal design, zero innovation and and ever greater reliance on subsidies from the taxpayer and protectionism. 
When Margaret Thatcher quite rightly decided to turn off the subsidy tap in the 1980s the industries crumbled. Leftists blame her for destroying British industry but the truth is that it was destroyed by decades of Labour's Clause 4 in action. All Margaret Thatcher did was administer the last rites. 
It's an interesting diversion to wonder what might have happened if the great magnates of British industry had been allowed to keep their businesses in the private sector. Would the exposure to competition and the drive for innovation, efficiency and quality that competition necessitates, have taken British industry in a different direction? Would the Brits today have a million more jobs in manufacturing and be recognised as world leaders in some industries? Would Britain still be mass producing Austins, Triumphs, MGs and Rovers? 
Worrying trends are appearing in the Obama administration's policy discussions and Canada's too. Business owners are telling me they do not want to move their work to China but how can they compete with cheap Chinese products flooding our country? 

Do You Really Want a Job with Private Equity?

Why job hunting at a company partnered with private equity is nothing like you have

experienced before.

Looking for a new job this year?

There are interesting career opportunities being created by owners of

companies who are partnered with private equity. I hire for these unique

businesses and have come to see a huge difference compared to corporate

recruiting.

It may seem choke on your chai tea rude to say businesses with private

equity on board do not care about your career. If you grasp this difference

though, you are more likely to get the job and make them care.

These businesses have owners. The private equity partners are also owners.

Can you put yourself in their shoes and realize how you will impact directly on their personal bank balances?

These owners are self made, ego driven characters. They have been beaten

up; it's no longer business as usual, rules have changed big time. Owners

take risks at major cost to them and their families. Now they are risking it all

again to make the leap to the global market.

Take Guy Ritchie--Madonna's ex-husband or play thing--he knew to leap out

of England, into the international movie scene. (Nothing like scorned love to

make you be creative.) Guy came to terms with losing some control and

partnered with private equity. Even though he managed to pocket a 50

million pound settlement from his missus, his private equity partners raised

$80M to film his meandering, but wryly amusing Sherlock Holmes movie.

With this partnership, Guy was able to bring in talent to appeal to a crowd

not familiar with Stephen Fry, Baker Street or high tea. The scenes between

Robert Downey Jr. and Jude Law were the best part of the movie for me,

although I am also rather fond of Rachel McAdams, but preferred her in The

Time Traveller's Wife. Did you know Brad Pitt was the executive producer?

I digress.

And that is exactly what I am talking about - when speaking to private

equity companies, do not go off on tangents, no matter how delightful

and deliciously amusing these may seem. You will appear off target and

plain wasteful.

Keep all conversations (phone calls especially) razor focused on the actions

required on the job within the first six months; why you are the one to do

this urgent and purpose-filled work. The information to get across is your 3

step plan to make the business more money than Brad Pitt could hold above

his head.

Working for owner managed companies is not like the 100 Top Companies

with toaster oven prizes at the monthly beer bash. Owners are anxious for

results, for action, for hefty pushing the wheel up the hill. Leave out

indulgent chats about your recent ski trip, why you can not make a five

o'clock appointment because you have to pick up the kids, how your child

won a scholarship to Ivey, is visiting Nepal, is on drugs or whatever. You

think you are bonding, they are hyper-judging.

If you are from a corporate environment, you will be suspected of having soft hands,

soft soaping your seniors rather than telling the harsh truth and comfortable

calling in consultants rather than rolling up your own sleeves.

Understand that about 150 other people applied, and there are 5 who are a

better fit. Realize that you can leap frog them by knowing this one tip: it is

not about your stupid career, it is about how you would help the company

bring in cash flow.

Companies where private equity is a part owner really, really care. Have

you made a company performance oriented? How did you contribute to the

top line, not the bottom line (and if you don't understand that - call your

favourite business coach.)

Private equity partnered companies work lean but give opportunity to use

brains and skills. Former armed forces people can be found in private equity firms probably because they are used to jumping out of helicopters with people screaming "Go, go, go!" That is the environment. If that does not appeal, go to the Post Office. I hear they have terrific careers.

Jacoline Loewen is a financial consultant to business owners, raises capital to grow the business and is the author of Money Magnet: How to Attract Investors to Your Business. 

 

The City Needs to Get out of the Way of Business

Ford for Mayor! Last night, at the Mayors' debate, he said the most profound statement about the City's role.
Ford said, "We need government to get out of the way of business." 
He went on to explain that government needs to let the business people get on with what they are trying to create and get on their side instead of against them.
Pretty profound.
I would like to see Ford get a big vision articulated of Toronto as a City for Entrepreneurs to come and set up as there is smart university talent here for employees, etc.Miller had his Green City, we have heard about being a Creative City, what about being a City that supports business operators?
Another point is that the mayors seem to think that all businesses are stores or cafes. There are high intellect businesses too and we also want the City to help us.
If there is funding to going to parades, what about an engineering competition and forum. Instead of just parties and drinking, what about intellectual business events? 
I am grateful though that most of the candidates realize it's time to downsize and help business do what they do best. 

Smackdown at the Gladstone

Grocery Gateway and Real Programming for Kids founders and owners are my guests to the 6 Mayors' discussion tonight on "what can Toronto do for business?"
It will be interesting as Ford, Thomson and Rossi have all had the pain of running their own businesses and know the rock face it can be.
When I listen to Stephen Tallevei, founder of Grocery Gateway, talk about his uphill struggles with getting his online grocery store to succeed, you know why being invited in as a private equity partner is a privileged partnership. Elliott Knox, RP4K, runs thousands of programming courses for teens each year and he describes his last year as similar to climbing to the top of Hamburger Hill and sent me the link to the movie.
We will be at The Gladstone Hotel, redone by the architect firm,  Zeidlers, and it is unbelievably glamourous. Anyone can attend the talk and we must thank Globe & Mail for hosting such a worthy event.

Is China ending its relationship with Capitalism?

I am listening to the head of GE speak in Toronto at an off-the-record speech to my secret handshake club.
His remarks on China at a private function were disclosed last month and have continued to stir up debate about China and America's relationship. Here is a terrific comment in response to an article on China:

I've spoken with executives at American companies that tell me they have "their own factories" in China, and they seem proud of it. But then when I ask, "Doesn't the Chinese government own 51% of your factory?" they'll then say "Yes, well, err, that's the way they do things over there, but it's our factory!"  

Not really. Since we began on this road to globalization, that is, free and mostly unregulated trade, just about the same time that Chairman Deng was opening China to Western capitalism, China has played us for fools. We've taught them how to make everything we know how to make, from steel to computers, iPods to cell phones, giftware to American-style furniture, and all the fittings and components and add-on's as well.When we decided to invade Iraq, Congress and the Bush Administration decided to keep the costs off the books and out of the budget, so we borrowed as much as $200 billion each year from China and Saudi Arabia, and a few other countries here and there. This, at the same time we were running a trade deficit with both countries and had to borrow from them to be able to afford importing all those great things we buy from China and all that Saudi oil. So while we were forcing American businesses to set up factories in China that brought in labor from the countryside at a whopping $5/day for 60 hours/week (no labor unions in Communist China, I suppose), we were exporting our manufacturing base and all of our manufacturing technology to that country and in the process enriching the Chinese government with virtually every dollar we spent. Now we're in a so-called Great Recession in which we're having to face the fact that we've lost literally tens of millions of good-paying manufacturing jobs, and China is doing great, up 10% a year, raising its general wage to another whopping $6.50/day and building what will become the second strongest naval, air and armed forces in the world. Not to mention their advanced missile technology, which they'll sell to anyone with money to buy it.

We've been such chumps.
Of course, Obama says he has a plan to create great jobs that can't be outsourced. Nonsense. The Chinese are way ahead of us in wind and solar technology. They've taken their riches and put it into vast new infrastructure projects and research, and when we finally have the resolve to build those new highways or create that new electric grid it will be with Chinese machinery and technology.
The Republicans are no help either, as they don't seem to have a clue about how to create jobs. They just want to protect the banks and Wall Street so they have the money to win elections and make it easier for the rich to get richer while denying any help at all to everyone else.
I see no future for this country unless and until we confront the outsourcing of jobs to China head-on. Globalization doesn't work for us when overseas labor is so cheap. China doesn't play by the same WTO rules in any case. It's time to establish bilateral trade agreements with key trading partners under which they can't export to us very much more that we export to them. At the same time, we need to protect key industries that are vital to our national security, like steel, metal fabrication of all kinds, shipbuilding, electronics with military uses, on and on.
There's no other way out of the downward spiral of cheap goods forcing Americans out of work, so they have less money and have to buy cheap Chinese goods, which leads to more layoff's, and down we go to being a third world country. It's time someone in Washington, and in the media, had the courage to call a spade a spade. The loss of our manufacturing base is what's killing America and unemployment won't go down until we begin to restore it.