ÜBERRICHPROFITSFORSMALLFIRMS

When a cottage owner got a letter fromOntario’s Ministry ofNatural Resources in-forming him of taxes

being levied on his Muskoka property because the water under his boathousewas Crown-owned, he simply didn’t have the time to deal with it.

The business owner was far toobusy to track down the right people,deal with theministry and arrange for a land survey. It was starting to stresshim, so he called his “family office” and they took care of it. As a bonus, itwas already included in their fee.

His is one of many cases Toronto-based Northwood Stephens PrivateCounsel deals with on a regular basisfor its 20 clients. It also demonstrates the benefits of a personalized ap-proach to managing the affairs of af-fluent families with complex needs,

which in some cases encompasseseverything from changing licenceplates and dealing with credit cardbills when your offspring goes on aspending spree in Europe, to execut-ing stock trades and writing wills.

“We have to sometimes train ourclients to realize they can actually come to us for a lot of these kinds ofthings they just haven’t even thoughtof,” says Tom McCullough North-wood ’s chief executive. However,like most multi-family offices, hisseven-person firm spends the bulk ofits time on administration and help-ing people manage their taxes, legalaffairs, investments and successionplanning.

It is this customized approachthat has led to a surge in popularityfor both individual and multi-familyoffices.

See FAMILY OFFICE on Page FP5

BY KAREN MAZURKEWICH

Just follow the money: As more mid-market privateequity firms look north forbusiness deals, U.S. financialservices companies such asCincinnati-based PNC Busi-ness Credit are also position-ing themselves for a piece ofthe pie.

The company has plansto open an office in Torontoearly next year, according toPaul Schneider, chief operat-ing officer of PNC BusinessCredit.

PNC Business Credit ’s move to establish a satelliteoffice in Canada comes as lit-tle surprise to industry play-ers. Its parent company, PNCFinancial Services Group,also owns the mergers andacquisitions advisory firmHarris Williams — a com-pany that has stepped up itsactivity in Canada in the past year.SeeMID-CAP on Page FP10

U.S.mid-capequity firms want sliceofCanadianpiePNC PLANS MOVE

FAMILYOFFICESAREMOREINDEMAND

BY JONATHAN RATNER

TIM FRASER FOR NATIONAL POST

TomMcCullough, CEO ofNorthwood Stephens Private Counsel, manages the affairs of 20 affluent families in detail.

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BY CLAUDIA CATTANEO

Calgary Bureau Chief

RIYADH • Anxious to over-haul his country’s poor imagein much of the West, SaudiArabia’s 83-year-old monarch,King Abdullah, invited sur-prised members of the pressto dinner Saturday night at his conference palace, a mag-nificent bastion of white andblue marble, gold and crystalthat makes France’s Versailleslook like a poorhouse.

Reporters covering theThird OPEC Summit receivedpersonalized invitations fromthe King’s office hours beforethe tight-security state occa-sion.

The dinner for 1,000 jour-nalists and officials markedthe opening ceremony of thetwo-day meeting of the leadersofOPEC’s 13 member states.

With traffic in Riyadh’s twomain arteries, Mecca Roadand King Fahd Road, haltedfor the occasion — the Kinggave the city’s 4.5 million resi-dents two days off to celebratethe event — reporters fromaround the world were busedto the complex four hours pri-or to the beginning of the pro-gram so they could be seatedin time for the King’s and hisguests’ arrival.

The ceremony, with pompand circumstance fit for a roy-al occasion, started in a gran-diose conference area lit bycrystal chandeliers the size ofhot-air balloons.

Hugo Chavez delivereda fiery opening address inwhich, much like in theOlym-pics, he handed over thechairmanship of the summitto King Abdullah. Venezuelahosted the second summit inCaracas in 2000.

SeeKING on Page FP3

TheKingand I—and998othersTHIRD OPEC SUMMIT

Saudimonarchsurprises media

with lavish dinner

SMALL BUSINESS

NAT I ONAL PO S T , MONDAY , NOVEMBER 1 9 , 2 0 0 7

ALI JAREKJI / REUTERS

King Abdullah is anxious to overhaul Saudi Arabia’s

image in theWest.

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FP5NATIONAL POST, MONDAY, NOVEMBER 19, 2007 F I N A N C I A L P O S T

Sandra Rinomato is known for multitasking — she’s a full-time real estate agent, writer, blogger and tele-vision personality — and now she can add “Best Canad-ian Entrepreneur” to her impressive resumé. The Stevie Awards for Women in Business (the only global awards of its kind) took place at Caesar’s Palace in Las Vegas last Monday, and honoured 43 outstanding executives, busi-

ness owners and companies, including Ms. Rinomato. Shewas selected from hundreds of real estate agents vying forthe job to host a real estate reality show for HGTV Canadain 2006. Despite having no experience in television, hershow Property Virgins has become the top-rated show

for the broadcaster. In addition to this role, Ms. Rinomato writes articles and blogs on HGTV.ca, and is a full-timereal estate agent for Coldwell Banker. And, just to keep totally busy, she recently completed her first book, Real-ty Check: The Real School on Real Estate. She is in talkswith publishers to release the book in 2008. Dana Lacey,

Financial Post

G L O B A L A W A R DHGTV’s host of ‘Property Virgin’ adds Best Canadian Entrepreneur to resumé

Ontario is one of theworld’s most prosper-

ous regions. As shown by ourresearch in the 6th annual report to the Ontario publicby the Task Force on Competi-tiveness, Productivity and Eco-nomic Progress, only a handful of similarly sized regions out-side North America can claimhigher gross domestic product per capita than Ontario. It isfair to say the province is oneof the most competitive re-gions in the world.

Yet, Ontarians could dobetter. We continue to lag our prosperity potential, asdefined by the gap in GDPper capita with our NorthAmerican peers. Among themost populous U.S. statesand Canadian provinces, On-tario stands 15 out of 16. Onlytwo decades ago, we were inthe middle of the pack of theworld’s leading jurisdictions.

As the government de-velops its legislative agenda and budget, the task force rec-ommends a few priorities. In taxation, we urge a fundamen-tal rethink of how government taxes. It is fair to say Ontariohas one of the worst regimesfor new business investment.Three factors drive this stand-ing and ought to be prioritiesin the coming budget.

First, provincial retail salestax is charged on purchases byOntario businesses, not just the public at retail outlets. This means businesses face anadded cost of up to 8% when they invest in technology and equipment that boosts pro-ductivity, wages, and job cre-ation. Our research and theresearch of others shows that replacing the traditional retail sales tax with a value addedtax, similar to the federal goods and services tax, bene-fits working Ontarians.

Second, we have relatively high taxes on corporate income — another barrier to invest-ment. The recent reductions bythe federal government to re-duce rates are welcome — thereal improvement opportunity is now in the province’s hands.

Third, once businesses have made their investments, theprovince taxes capital assets over their lifetime. The prov-incial government has recog-nized this hinders new invest-ment and job creation, and ithas committed to eliminate itby 2010. It should do so now.

Ontario is not the onlyjurisdiction with these taxeson business investment, nor are they the highest in each.But they are combined in sucha way that Ontario ends uphaving the highest taxation on new business investment

among developed economies.On the personal side, the

province needs to find ways toreduce the marginal tax burdenon lower income Ontarians and strengthen the incentives for work.

There’s lots that needs tobe done beyond taxation. Ourrecent research indicates theneed for innovative invest-ments targeted to reduce pov-erty among specific high-riskgroups. That includes continu-ing to encourage youth to com-plete high school — failure toachieve this dooms their eco-nomic prospects. They need encouragement to pursuepost-secondary skills develop-ment through apprenticeships,colleges, and universities. Thetask force is heartened by thegovernment’s recognition ofthe importance of post second-ary education for competitive-ness and prosperity.

In 2008, we recommenddeeper exploration of the bal-ance between teaching andresearch at the post secondary level. Ontario has built an envi-able infrastructure of researchprowess in its universities.Meantime, it looks like Ontar-ians have drifted away from the other mandate of universi-ties — educating students. Ourresearch and student surveys indicate that our academic standards are solid; but stu-dents are not getting great daily experiences because ofoverflowing classrooms andpoor access to professors andenriching educational experi-ences. Those of us who at-tended Ontario’s universities ageneration ago would not rec-ognize the classrooms today.

Finally, looking at the struc-tures that drive innovation andupgrading, the government is urged to continue assessingwhether management educa-tion adequately supports On-tario’s innovation agenda.

Realizing our prosperity potential is a marathon, not asprint. We have been encour-aged by many of the initiatives already taken by the provincialgovernment. But at the outset of its new mandate, the taskforce sees an unparalleled op-portunity to engage Ontarians in the importance of competi-tiveness and prosperity and toembark on new initiatives that continue the journey to realizeour prosperity potential.

Financial Post

❚ Roger Martin chairs theTask Force on Competi-tiveness, Productivity and Economic Progress and itsresearch arm the Institute for Competitiveness and Prosper-ity. He is dean of the Joseph L. Rotman School of Manage-ment. James Milway is execu-tive director of the Institute.

Ontario mustinvest in

new businessR O G E R M A R T I N

A N D J A M E S M I LWAY

C O M M E N T

Women continue to blaze new trails in business

S M A L L B U S I N E S S

Single-family offices, whichbegan in the late 1800s withultra-rich names includingthe Rockerfellers, have ex-panded as managers took onthe affairs of friends. Multi-family offices reap the benefits of lower costs associated withshared resources — specialists from various disciplines.

The number of multi-family offices in the United States rose 30% in 2006 andmake up 3% or 4% of thehigh net worth marketplace, according to Benjamin Poor,

associate director at CerulliAssociates, a Boston-based financial services market re-search firm.

“They’re a pretty smallpiece, yet they’ve been grow-ing very quickly,” he said,noting that this popularity can be attributed to theirperceived independence. “It’sdefinitely true that they aretaken seriously and can com-pete with the larger globalinvestment firms.”

While there are only a few independent multi-familyoffices in Canada (anotheris First Affiliated Holdings), people are taking notice. BMOFinancial Group, for example,

is actively pursuing Canadianhigh and ultra-high net worth clients.

Graham Parsons, executivevice-president of global pri-vate banking at BMO, thinksthe model that has provenso successful in the huge U.S market with its Chicago-based Harris myCFO division,should work in Canada be-cause the market is growingso quickly.

“We certainly think themarket is big enough,” hesaid, highlighting the morethan 7,000 Canadians withinvestable assets in excess of$20-million and 444,000 withbetween $1-million and $20-

million. “We’re seeing a lot ofliquidity events on both sidesof the border of privately heldcompanies being sold.”

BMO estimates that in thenext 10 years more than 50%of Canadian and U.S. private companies are going to bechanging hands. Demograph-ics is also a factor as BabyBoomers get set to retire. Sotoo is private equity.

These groups are both buy-ing these business and getting investments from their formerowners who now have excesscash.

But it is not just retirementthat concerns them. Somehave or want to establish char-

itable foundations, and most want to educate their childrenand get them involved with the family’s finances.

“The entrepreneurs I meet have a lot of concern aroundhow the wealth is going toimpact their children,” said Ruth Steverlynck, director of PricewaterhouseCoopers’Centre for Entrepreneursand Family Business in Brit-ish Columbia.

“How much do they give? When do they give? Is it go-ing to stagnate their chil-dren, their studies, becausethey know all this money iscoming in and they haven’t ever educated their children

around their wealth?” sheasks.

Whether you are a widowsuddenly sitting on a large amount of money, a single Sili-con Valley billionaire in yourthirties, a run-of-the-mill high-income executive, an entrepre-neur with a business to sell, ora family with generations ofwealth, multi-family offices, independent or not, want you.

And whether its buying aBoeing 727 or a duck-hunting farm, customizing a yacht, or getting your child into aparticular school (all real ex-amples), or more traditional needs like investment, prop-erty management, philan-thropy, conflict management, insurance and health care, afamily office can help.

Financial Post

One-stop shopping for wealthy families on the rise in Canada

B Y D E E N A W A I S B E R G

In business there are few things quite as exciting asbreaking new ground throughinnovation.

The RBC Canadian Woman Entrepreneur Awards, in its16th year, honours womenwho have made a significant contribution to Canadianbusiness. Tomorrow night inToronto, winners of the 2007awards will be named frommore than 100 semi-finalistsand hundreds more nomineesfrom across the country.

Below, three former win-ners share how they got start-ed in business. In 1986, Yvonne Tollens andher husband, who are basedin Okotoks, Alta., startedComputerAid Professional Services Ltd., a software com-pany tailored to the cattle in-dustry. Coming from a familyof ranchers, Ms. Tollens wasinspired by a desire to helpthe industry become moreproductive and efficient.

Necessity was the motherof invention for Toronto-based Marianne Bertrand, president and founder of Muttluks. In 1994, she was working in theconstruction industry and wasgoing to be short on her mort-gage when a pair of dog bootsa friend had given her sparked an idea. The boots were in-effective, but she believed ifshe could make and sell better ones, she might meet her mort-gage payments. She made 134pairs of boots and sold 130 intwo weeks, raising more thanenough funds and launchingMuttluks. But inspiration andinnovative product is just thebeginning.

These women figured outthat their innovation has toserve an unmet market need.

In Ms. Bertrand’s case, noone was making practical dogboots in 1994; they were morea novelty item. Dog ownersneeded boots that could with-stand the elements. “Our bootsare constructed better, stay onthe dog’s feet and last longer,” she says.

In contrast, brides hadplenty of gowns available tothem but no easy way of nar-rowing the selection. NoraMcAleer, president of The Bridal Centre, installed a120-seat theatre complete with runway in her Calgary bridal store and started pre-senting fashion shows. “We went to all the major marketsand they would put on theseshows for the buyers, and Isaw how much easier it was toselect gowns when they were

modelled. It also elevated the buying experience. AndI thought, if I’m reacting thisway, so will my customers,” she says. Bridal designers alsoshow their lines at the BridalCentre. The innovation hashelped about 50,000 bridesfind dresses.

Once they are up and going,entrepreneurs must be able toadjust to changing market con-ditions. When Bovine Spon-giform Encephalopathy (mad cow) struck North America, theborder between Canada andthe United States closed. After they re-opened, the paperwork and labour required to exportcattle became onerous andcost producers approximately$15 a head. Ms. Tollens and herteam created software to helpexport cattle more efficiently and bring down costs. Work-ing with the Canadian Cattle

Identification Agency, the soft-ware helped producers create documentation verifying thecattle’s age and health as op-posed to border officials having to check each cow’s teeth. “It’sabout having the right piece of

information at the right timeto make the right decision,” shesays.

Less obvious, but no less im-portant innovations are thoseof work process. Ms. McAleer,for instance, installed a sophis-ticated $50,0000 computer

system. “The bank thought Iwas crazy,” she recalls. But in-vesting in this infrastructure allowed her to record and track orders, ensuring every wedding dress arrived before the big day, which doesn’t always happenwithout this tracking system. “We’re never missed a weddingin 29 years,” Ms. McAleer says.

Where do innovative ideascome from? Ms. Tollens says the clients tell you what they need. Ms. Bertrand reveals she has picked up a trick ortwo from competitors who“may be doing 10 things wrong, but one thing right.” And of course the right mixof staff helps. Ms. Tollens hashired people who can comeup with ideas, problem-solv-ers, and those who are skilledat teaching others how to usethe technology.

Financial Post

TED JACOB FOR NATIONAL POST

Yvonne Tollens: Her software was inspired by her desire to help the cattle industry.

Necessity is often the motherof invention

And I thought, ifI’m reacting this way, so will my

customers

FAMILY OFFICEContinued from Page FP1