Challenges of Operating in Multiple Countries

Contribution by AceTech Ontario CEO Member Mark Miller of Volaris Group

AAEAAQAAAAAAAAfBAAAAJGQ3NDkxMzU1LTVlMDQtNDdhZi1hNmMzLTkxOTkxY2Q4ZmVmNAEither through acquisitions or expansions your company has gone global. You now have opportunities in additional markets, but also face a new set of challenges.

These challenges may be cultural challenges, such as adapting to a wide range of business environments, and operational challenges, such as setting up lines of communication which allow your company to function as a global company, rather than just a company that happens to have a lot of offices in different locations.

Some of the common challenges that companies face when establishing a global footing are as follows:

Human Resources and Talent Management

Companies need to focus on having the right people in the right place when executing a global strategy; as human capital is at the core of driving a successful global business. This requires providing ongoing coaching to your executives and leaders, so they can adapt to the different cultural environments, while working on their business management and leadership skills.

At Volaris, we recognize that cultivating the next generation of leaders is essential to continued growth and sustainability. Hence, we encourage our leaders to develop a long term perspective, and provide them with the autonomy to make decisions, in order to meet a clear set of goals and objectives in those global markets.

We also empower our leaders with the necessary tools to succeed in a global environment, through regular performance reviews, mentoring, and corporate summits. This helps keep our teams motivated, attracts better employees, engages our customers, and helps our leaders manage growth more effectively.

Catering to Different Markets

It is crucial to understand what works in your domestic market might not work in other countries around the globe. Thus, when expanding into a global market, your company needs to be conscious about the perceptions, needs, preferences, and other attributes that affect the decision making process of the customers in that market in order to customize your solutions.

The same concept applies to the products that you offer in those global markets. Some products might qualify as global products when they solve a common problem for all your international markets. However, forcing customers in a new market to adjust to all your domestic products might not be well received. Therefore, you need to conduct a thorough market analysis to deliver localized products and develop processes that satisfy your customer’s needs.

You also need to consider tailoring your marketing efforts to match the new market’s preferences. For example; adjusting your brand positioning, translating your marketing materials and corporate website, customizing your sales cycle, and evaluating your digital marketing and communications strategy.

Communication

Having your operations spread out across multiple countries and time zones can make it tricky to communicate. This also slows down the decision making process as there are only a few hours a day of common “awake” time.

At Volaris, we encourage our leaders to regularly use the company intranet site as a tool to collaborate with peers across multiple businesses, regions and countries electronically. Many of the academies we have put together in the past have proved to be an effective method to
share best practices, and allow our businesses to collaborate with each other while understanding each other’s goals.

We also host quarterly corporate summits with general managers and leaders from all over the globe, as we firmly believe that these summits play a crucial role in bringing people together; in order for them to learn, share, and grow.

Global companies must continually work on creating opportunities such as these, which encourage a face-to-face interaction between their teams, as this can definitely help boost team morale and increase collaboration.

Remember

Depending on which industry you are in, you will face additional challenges that could affect the way you run your business in those global markets. It’s always important to conduct a thorough research on your competition, legal regulations, and other factors relevant to your industry, prior to making the big move.

Advertisements

Acquisitions on the Brain?

Mergers-and-Acquisitions-Insurance-1011Often with acquisitions, some of the most important considerations happen before and after the deal.  To get an inside take from someone who has years of M&A experience, we sat down with Dennis Ensing, CEO of TransGaming and AceTech Ontario CEO member.  Dennis took us through some key aspects of an acquisition process that can either help or hinder the transaction.

Before Negotiation:

Everyone knows there’s two types of acquisitions, there’s the ones you seek, and there’s the opportunistic acquisitions that fall in a CEO’s lap. As great as the latter are, Dennis feels that as a CEO of a growing technology company, you should always be seeking out targets for acquisitions and have a process in place to do so.  With that being said, there’s some considerations to be made once one of those leads takes fruition.  To a large extent, the M&A process is not core to the business you are running, so they can often be a distraction.  So once you’ve got an acquisition on your plate, something else tends to fall off, “if you’ve got one eye on the business and one eye on an acquisition, then what about financing, what about planning for the exit, what about my family at home?”, says Dennis.  To make sure nothing falls through the cracks, many companies will hire an investment bank to be the front end of the transaction process.  For those who don’t, it’s critical to have someone by your side who’s running point on those areas that you know are going to suffer during the acquisition process (except probably for your family!).  “If I’m running the acquisition process and moving forward with a transaction, the core business better not suffer”, says Dennis, “and I need to know that I’ve got a right hand person who’s pushing that forward towards the objectives that we set and achieving the milestones that we need to so that my ‘distraction’ isn’t affecting them.”

Since an acquisition can take 4-6 or even 8 months before completion (after being identified), it is critical that before you start you have a process in place for what those next months are going to look like and who is accountable for what.  If not, it can take on a life of its own and can end up taking 9-12 months, or even 18.  During Dennis’ investment banking days, he became increasingly frustrated that there was no general overview in place of what the process looks like.  As such he created his own.

Click here for Dennis’ acquisition process & timeline.

After the Transaction:

Have you acquired a company? Congratulations! But there’s a couple things to remember once the deal is done, “If you don’t plan for integration before the closing, you can end up with a real mess”, says Dennis.  Acquisitions take a team, and that team can fluctuate through the process, but it’s important that you’re bringing your key business leaders in at the appropriate times so they can plan before closing and take ownership of the integration.  Part of the integration process includes culture.  After the dust settled with TransGaming’s 2012 acquisition of Oberon Media, they started to make integration related changes, and the top of that list was managing the cultural fit between the two businesses, “Culture trumps everything. People can sit there with the spreadsheet and say ‘oh, that’s what the integration will look like’”, explains Dennis, “but if you can’t marry the cultures, it’s never going to work”.

 

Not Another Millennial Article

Millenials

These days it seems that each week, there’s a new article on Millennials in the workplace and how their professional expectations are vastly different then the generations before them.  We sat down with Chris Wiegand, CEO of Jibestream and AceTech Ontario CEO member, to find out how he’s adapted to the newest generation in the workforce and how he’s made it work in Jibestream’s favour.

The first thing employers need to understand is that many Millennials are not motivated by compensation the same way their parents and grandparents were.  It is still a key consideration, however, there are other significant factors that come into play.  Chris notes that a Millennial’s desire to constantly learn, grow and be challenged is a much stronger factor, if not the most important, when considering a place of employment.  “We have to make sure we rotate people throughout the company so they don’t get bored”, says Chris, “we want them to feel like ‘yes I’m not just doing the same work over and over again, I’m learning, I’m part of R&D, next week I’m part of something else’. Although it’s not always or practical to rotate people in their roles but we are very conscious of keeping people engaged.”

Impraise Blog states “according to a study by Intelligence Group, 72 percent of millennials want to be their own bosses at work. If they do have a boss, 79 percent of them state that they want their bosses to serve as a coach or a mentor. The research explains that there is a need for a performance management system designed to guide employees into being more equipped experts in their line of business.” Chris has recognized this among his employees and has noticed that annual or even quarterly reviews are not sufficient anymore.  He has ensured that his employees are having weekly 1 on 1’s with their supervisors.  These meetings are not simply about what the employee’s current tasks are, but what’s working for them and what’s not working for them.  Chris has found that if they do not have the opportunity to do this, the frustrations they are having will fester and soon they will be looking at job boards.  These meetings are also key to ensuring that your employees are continuing to work towards their goals. “It’s important to make a clear growth trajectory for people, so that when you start someone off in a role, even on inside sales, that you have a clear path for them to be enterprise sales person, if that’s what they want to be”, explains Chris.

When it comes to employee retention, Chris says that “the more you teach, the more they get out of it and the longer they stay. Eventually they’ll leave on great terms and you’ll get the best out of that person for those X years”.  It’s also important to continually gauge the temperature of your employees, be open to changes and to try new things.  When Jibestream adopted Slack, Chris felt uneasy when he saw hundreds of giphys go across the app.  However, he’s realized that Millennials appear to be very strong at multi tasking and despite all the memes, his employees are hard working.

Chris has discovered that when recruiting Millennials, transparency and social accountability are paramount.  “I think things like Instagram and Facebook are good because they allow people to see your culture. They say a picture is work 1,000 words.  We share a lot of pictures and 80% of them are probably the office dogs”, laughs Chris, “but people can now start to fill in the blanks and understand the work environment and see themselves fitting in here – we try to make sure everything is consistent and representative of the workplace”.  In addition, you’ll notice on Jibestream’s job board, they are very honest about potential challenges a candidate may have in that position.  This results in interviewing candidates who can see themselves fitting into the environment and welcoming the challenges that they may face.

Chris feels that it’s important for his fellow CEOs to remember that Millennials do not make up 100% of the workforce.  “Don’t change everything you do to be universal for this group of people. The challenge is to make sure it’s still a dynamic management system”.  He feels it is important to not let the emergence of a new generation in the workforce change your whole company.

At the end of the day, Chris feels it ultimately comes down to emotional intelligence. “It’s about how you should be best addressing each different type of person in your group and then managing to that. Your managers are going to have to manage one person maybe slightly different than the other but still make it fair”.

 

So You’re Thinking of Going Public

public-to-private-company.pngIf you’re a CEO or a CFO, there’s a lot of differences in your day if you are running a public company versus a private company.  As most of the members at AceTech Ontario run private companies, there tends to be a lot of questions around what is involved in going public.  We decided to sit down with one of the few members of AceTech who are running a public company to find out what he has learned and what his advice is for fellow members.

Rob MacLean is CEO and co-founder of Points Loyalty and is a CEO member of AceTech Ontario.  His company did not exactly take the most typical path to becoming a public company due to circumstances and the hand they were dealt.  Points was incubated back around 2000 by a company called Exclamation Inc.  As such, they were a private company inside a public company.  Shortly after, as many people will remember the “bubble burst” and investments in private dotcom companies severely tightening up.  However, Points had gained substantial traction at this point so Rob and his co-founder, Christopher Barnard, combined Points with their parent company.  Thus they were now public and could more easily tap into that marketplace for capital, as well as utilize the funds that were remaining in the Public vehicle.

Other positives included an opportunity for transparency.  Points’ clients and partners are Fortune 1000 companies: big airline companies, hotels, etc.  Being a public company meant that Air Canada for example, could view their financial statements and know that they were a healthy company.  This gave them some inherent credibility, which was a great asset to them in the early days of business development.  Additionally, one of the ways they were able to attract talented employees early on was by being able to provide monetary value through liquid equity.  This is something that is very difficult to do for employees of a private company, and was particularly challenging for private  company’s post the  dotcom “bubble”.

Unfortunately, you can’t have positives without some negatives.  Rob discusses how, despite the fact that being public helped them recruit, the same positive was also a negative for them due to the size of the company.  “We’ve had periods over the years where we’ve grown the business 60% in one quarter in a year over year basis and the stock has gone down. You think ‘okay, that seems odd’”, explains Rob, “but  may have been more driven by a hedge fund closing shop , and so they have to sell their position and so you get into that classic supply and demand of stock”.  It can be very difficult on employees to see their stock move around as it does and have very little control over it.  Rob strongly believes that a company needs to get to a much larger, more stable stage before that volatility goes away.

Another big challenge Points faced was time and money.  “It really is quite a significant driver of work load from a CFO, CEO standpoint”, says Rob, “There’s certainly stages over the years I would have spent 40-60% of my time on public company type activity rather than in directly driving the business”.  Depending on the company, and its objectives, this isn’t necessarily time well spent for the CEO.  Rob would argue that they would have been better served if he was able to spend that time building the business instead.  There is no question that this takes away a signification amount of time from the CEO and Finance  roles within the company.  Additionally, it cost Points between one million and one and a half million dollars to operate as a Public Co.  Not every company can absorb this kind of cost, and the dollar amount has largely been the same regardless of the size of Points……meaning it was a significant burden in the early days when revenues and profits were smaller.

One point of concern Rob has for his fellow CEOs if they do decide to become a public company is focusing too much on the quarterly pressures.  There is a reputation that public companies are forced into quarter by quarter management style, and Rob admits that there’s some truth to that.  Since Points is considered, especially back in the early days, a very small public company, they made sure to still focus on the long term view of the business.  “It would be very easy to fall into the trap of not making the right business decisions because you were trying to meet a quarter,” says Rob, “I think generally speaking we’ve been able to avoid that, but there’s certainly a lot of pressure that people should watch out for. Having a strong , aligned Board, is critically important in avoiding the temptation of managing quarter to quarter.”

Another point for CEOs to pay attention to is the company’s growth trajectory.  Before going public, you want to make sure that your company’s growth is predictable as that is what the public market responds best to.  Rob explains that despite Points having continual growth every year, it was not a consistently increasing growth percentage which resulted in “chunky” (obviously a technical term) growth.  This made their trajectory difficult for the public market to understand. Analysts often seem to be more comfortable with a predictable 5%  trajectory  vs a growth profile that may be much higher , but less consistent.

There’s a belief that going public is the ultimate end game.  But all in all, if you are thinking about taking your company public, think about if it is the right time, and are you doing it for the right reasons.  “I think that there’s most certainly a place for being a public company, but you have to be very careful and very thoughtful regarding when is the right time” says Rob, “Access to capital is probably the most sustainable advantage in being public, but as with most good things, this benefit  comes with that are lots of challenges in terms of time, resources and cost.”

So at the end of the day, you have to ask yourself, are you going public for the right reasons?

 

Toronto Stock Exchange

Contribution Post by one of AceTech Ontario‘s Community Partner: Michael Kousaie of the TMX Group.

Five important takeaways on the financing activity, IPO transactions, and sector performance on TSX and TSXV in 2016

As we approach mid-year, I’ve had a number of people ask me to share some updates on the financing activity, IPO transactions, and sector performance on Toronto Stock Exchange (TSX) and TSX Venture Exchange (TSXV) in 2016. Five important takeaways are summarized below, but the main message is simple: even as other sectors in Canada have shown encouraging signs of life in recent months, the technology/innovation sector (covering companies in tech, clean tech/renewable energy, and life sciences) continues to stand out.

KEY TAKEAWAYS IN H1-2016

1) We’re number 1 – really. The broad Canadian market has been one of the few stock markets globally to show positive returns in 2016 (as at June 27); and our main indices (the S&P/TSX Composite and the S&P/TSX Venture Composite) have outperformed all other major global indices in 2016.

2) Tech companies continue to go public. Since the start of 2016, 16 new technology/innovation companies have gone public on TSX/TSXV (to the end of May) – this represents nearly 60% of all corporate IPOs and new listings on our exchanges. These companies represent a mix of businesses from the technology (8), life sciences (6), and cleantech (2) sectors. They also include a mix of smaller companies (13 listing on TSXV) and larger businesses (3 listing on TSX). The activity in the technology/innovation sector in 2016 continues a multi-year trend on TSX/TSXV – if you haven’t already seen this, take a look at this short video which condenses the last 7 years into 85 seconds.

3) But where are the large IPOs? Large and high profile tech IPOs and follow-on financings on TSX have been notably absent this year. In this respect, Canada has followed the lead of the US market which has also seen a significant fall in IPO activity. For many larger companies, this has allowed more time to prepare for an eventual TSX IPO (timing the market is hard – but getting prepared to move when market windows open is easier). For many smaller companies, though, this has not had a significant impact (see #2 above) as most small companies go public in Canada via a path other than an IPO.

4) Making money in Canadian tech. Investors have made money investing in the Canadian tech sector. This is obviously very important. Consider this: the S&P/TSX tech index has outperformed the Canadian benchmark index over the last 1-, 3-, 5- and 10-year periods (to the end of May). The same index has also outperformed the S&P 500 over the last 1-, 3- and 10-year periods (also to the end of May).

5) Welcoming the world. TSX and TSXV have always been major listing venues for non-Canadian companies (at last count, we had 235 international companies listed on the exchanges). This has been especially true in the technology/innovation sector in 2016 – of the 16 new technology/innovation companies to go public on TSX/TSXV this year, 7 have been from the US (6) or Israel (1).

The key takeaway is that the Canadian technology/innovation sector has continued to perform well in 2016 and we are hopeful that the momentum will continue to build for the balance of the year. We’re also hopeful that improving market conditions will eventually support more large-cap IPOs in the sector.

Our team continues to work closely with companies, their boards, their investors, and their advisors to help them understand and pursue their funding options. We’re standing-by to help with transaction preparations, to provide guidance on public market readiness, to make referrals/introductions to advisors, to help companies build profile with the investment community, and to connect leaders through our peer-to-peer learning and networking events.

Please feel free to reach out if we can help any of the AceTech Ontario companies as they consider their funding options over the coming months.

Michael J. Kousaie
Head of Business Development, Technology Toronto Stock Exchange and TSX Venture Exchange
Phone: 416-947-6626
Email: michael.kousaie@tmx.com
Follow us @tsx_tsxv

The information provided is not an invitation to purchase securities listed on TSX or TSX Venture. TMX Group and its affiliated companies do not endorse or recommend any securities referenced. The information provided is not intended to provide legal, accounting, tax, investment, financial or other advice and should not be relied upon for such advice.