Carlyle Learns Bitter Chinese Lesson

In 2005, the Carlyle Group agreed to pay $375 million for Xugong Group Construction Machinery, however, according to the Financial Times report, it soon became a contentious issue that the Chinese government was pressured to block by nationalistic groups.  The asset was considered a strategic asset that was being sold at a bargain price.  The deal fell through this week, in what many consider a culmination of the difficulties of doing business in China.

Private Equity Hot for Infrastructure

In 2005, there were four infrastructure-focused private equity firms in the market looking to raise $US 1.8-billion, this year there are a record 71 such funds.  An article in The Globe and Mail reports, these funds have emerged as a result of the recent volatility in the market, energy infrastructure companies and power utilities have become highly valued for their stability, long-term cash flow, and lack of correlation to other investments including equities and bonds, according to this report.

Hudson's Bay Acquired by NRDC Equity Partners

Established in 1670, Hudson’s Bay, North America’s oldest name in retailing, is now one of its newest private equity acquisitions.  The company was acquired this week by NRDC Equity Partners for an undisclosed amount, according to The New York Times.  A significant change initiated by the private equity firm will be to reduce the flagship store in downtown Toronto from 900,000 sq. ft. to 300,000 to 400,000 sq. ft.  

Oh no - not another crisis

"Warding off the next wave of banking crisis is the incoming challenge," says John Loewen of Loewen Partners. Top financial companies are stepping forward and not waiting for government to try to restore investors' brittle faith in global markets.
The Globe & Mail reports the financial leaders met in Washington to draw up recommendations that seemed pretty basic such as have a risk committee that understands the parameters of acceptable risk.
"Another point that rather floored me," said Jacoline Loewen, author of Money Magnet, was to do your due diligence. I guess with these "pass the parcel" debt structures which sent off the loans to other financial institutions, employees got lax because they didn't think the parcel would land back in their lap and blow up.
I am glad to see that business is getting ahead of the regulators because Sar-Ox has meant that the New York Stock Exchange plummeted in IPOs listings while London's AIM rocketed. Here's more:

Although some have interpreted the report as a pre-emptive move to avoid the burden of more regulation, he IIF was quick to insist that this was not an effort in self-policing, and promised to work with regulators on new rules to benefit the industry.
But there are limits to what central banks and market officials can do, Mr. Waugh said in an interview. “Prescribed regulation hasn't been very successful in averting crises and probably never will be.”

Outdoor Living Builds Business Skills

The definition of a Canadian, according to the late Pierre Berton, was "somebody who knows how to make love in a canoe." That confidence in managing the outdoors so as to achieve a desired goal is also an enduring characteristic of great leaders.
The CEO of a large construction firm told me about his travails in hiring the right CFO for his high growth business. “Once I know they can do the finance requirements, then I want to take them outside and back up a tractor trailer or get them in a canoe and capsize it in the middle of the lake.”
“Why on earth would that add to the skills of a CEO?” I asked.
“Because that is about being able to cope when suddenly pushed out of your comfort zone,” he said. “How do you react? Do you freeze and avoid? Or can you calm yourself and decide on a rapid course of action where you might not have all the answers? Are you willing to try the untried but keep your head?” Someone who has done outdoor living – camping, fishing, hiking – is used to planning, organizing and doing. There is also the confidence that they can manage if they run into an unknown situation. To head off into the outdoors, you can not help but develop these qualities.
Interesting enough, out of the 294 candidates selected to be NASA astronauts between 1959 and 2003, over 200 had been active in Scouting (and 11 of the 12 astronauts to moonwalk were scouts). A key goal of scouting is to develop confidence with being outdoors. The majority of the team of NASA astronauts in the early years were also from farming backgrounds. A farmer deals constantly with big weather pattern changes and incoming disasters. They have to be able to make a plan even when threatened with ruin.
The most famous Eagle Scout was the first man on the moon, Neil Armstrong. His ability to manage looming disaster came during his historic landing on the moon. As the spacecraft headed for the Tranquility Base landing site, Armstrong saw they were on crash course with a boulder that had not shown up on the surveillance photographs. The computer had 2K of computer power and was unable to manage the change. Armstrong had to recalculate (with a slide rule, sans calculator), flip off the computer and land the capsule himself. It was Neil Armstrong – calm and capable of dealing with difficulties – who saved the situation.
Even if your sons can not join the Scouts, we are fortunate in Canada to have such easy access to the great outdoors. There are fully guided canoe trips given through community centers for those parents not comfortable going to Algonquin Park on their own. Fishing trips with overnight stays are also a great family vacation sure to be remembered.
Many schools are making outdoor camps part of their curriculum. Some MBA schools run leadership programs using outdoor experiences to remedy the common complaint of the risk adverse attitude of graduates by beefing up “take action” skills.
Maybe it is not such a crazy idea to ask your potential new hire, “Have you ever been in a canoe?”