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Corporate growth is facing headwinds and presenting opportunity.
As business risks go, managing growth is always among the trickiest. This is particularly true at a time when Canada’s resource sectors are in a slump, capital markets are wavering, political lines are blurring and the timeline for domestic economic recovery is unclear.
No surprise then, that at the end of June Canadian mergers and acquisitions declined for the fourth consecutive quarter, hitting a two-year low. Resources—specifically energy and mining—contributed more than half of that decline.
That’s not to suggest there’s no rebound in sight: as commodity price pain continues and more energy companies confront their debt, opportunistic buyers, including pension fund and private equity investors, are likely to pounce. Although there is currently little pressure to buy assets, the first few deals are likely to trigger some intense competition, unlocking a new cycle of consolidation and growth. Everyone is trying to time the bottom of the cycle—and just how low oil prices will go.
Although big-ticket deals and new share issues are still getting done selectively—especially in the real estate, REIT and infrastructure space—there’s little doubt that recent circumstances will recalibrate how the survivors frame their financial recovery.
While the flashy deals that make blazing headlines and ‘transformative’ expansion have subsided, at least temporarily, the old-school, low-key merits of organic growth may regain some of their lost cachet.
For example, companies that have a short-term focus on cutting costs can allocate some of those savings to longer-term initiatives, such as innovation and efficiency. Those who defied the Bank of Canada’s 2013 exhortation to spend their ‘dead money’ cash reserves will be particularly well-placed. Without question, those who truly incorporate social licence and enhanced accountability into their recalibrated business model will shine the most.
Navigator has clients on both sides of the current dynamic: we counsel the hunters and the hunted. (Not in the same transactions, of course. That would be nasty.)
As professional advisers and outsiders, we derive the benefit of learning from close proximity to the challenges and opportunities that drive our clients. And when we’re at our smartest and most strategic, we apply some of those lessons to our own business.
This is particularly true when it comes to growth, something we’ve spent much of the past year doing.
We’ve built a new research team headed by Chris Kelly and Anne Kilpatrick. We acquired Playbook Communications, along with Mike van Solen and his team. We’ve enhanced our social media capabilities by repatriating Joseph Lavoie, who spent the past two years working in the Prime Minister’s Office.
Veteran broadcaster Don Newman has amplified our voice, and Sally Housser, an NDP stalwart and former press secretary to Alberta Premier Rachel Notley, has strengthened our voice—and our pitch!
We have also opened an office in London, positioning Navigator to better serve the growing number of Canadian clients who are doing business in the U.K. and European Union. Heading the practice there is Ashley Prime, formerly of the British Foreign Service and most recently the British Consulate General in Toronto.
It’s an exciting time. Changes in our own sector have allowed us to attract the best in the business. A strong culture and shared values have helped us come together as a cohesive team very quickly.
In the end, the only risk that’s even greater than that presented by growth is failing to grow. And even then, it’s always a balancing act: art meet science.
Navigator has opened an office in London, positioning itself to better serve the growing number of Canadian clients who are doing business in the U.K. and European Union.