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Art of the deal-makers: Toronto’s ACG is a catalyst to frenzied M&A scene

Family offices and high-net-worth families are playing a bigger role in facilitating mid-market deals

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Mike Fenton is president of the Toronto chapter of the Association for Corporate Growth, a professional organization focused on deal-making in the mid-market mergers-and-acquisitions sector.

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Launched in 1971, ACG Toronto is the largest international chapter in the ACG network, connecting more than 2,000 investment executives. The chapter also hosts more than 30 conferences each year, providing opportunities for networking, deal-making, building and sharing industry knowledge and thought leadership.

Canadian Family Offices asked Mike Fenton to discuss how ACG works and how family offices are playing a bigger role in deal-making these days.

What makes ACG Toronto significant for family offices?

We’re the largest chapter in a network that has 47 chapters in the United States and five in Canada. Our focus is on business in the mid-market sector. In Canada that means looking at deals with enterprise value of between $10 million and $250 million. In the U.S. the range is bigger, starting at around $25 million and going up to $1 billion.

What does ACG do for its members?

Our association has four pillars.

  • First, we focus on thought leadership, presenting what’s new and what’s coming in the deal-making industry.
  • Secondly, we offer professional development through our programs, both in person and online.
  • Third, we help build business relationships. There’s a very strong element to putting people together and having them follow up with successful deals, because that’s how investment deals get done.
  • Fourth and more importantly is what our name describes — we help companies grow. We’re all about getting people together for business development and deal flow, helping them find new opportunities. We consider ourselves the association for deal-makers.

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Tell us about some of ACG’s programs.

ACG chapters host more than 1,000 events across North America. In Toronto, on Oct. 27, we ran a webinar on the Maturation of Family Offices, focusing on their growing importance in deal-making.

On Nov. 9 and 10 our Toronto chapter is hosting a virtual Deal Source conference. Investment banks and M&A advisory firms from Canada and the U.S. will hold one-on-one meetings with private equity firms, capital providers and family offices. At this conference, they can talk about opportunities through a secure, online platform.

Deal Source attendees will also be invited to participate in the annual Capital Connection Conference on Nov. 16 and 17. These sessions will feature leading industry experts and topics covering the M&A industry.

More owners and operators who are buying, selling or recapitalizing their companies want to remain active investors instead of becoming passive. The result is that a lot of ultra-high-net-worth families are looking to compete or collaborate with private-equity investment firms in deal-making.

Are family offices becoming more important in deal-making?

They are, and it’s not a coincidence. We’ve seen the trend growing in the last five to 10 years, in the deployment of generational wealth as well as the transfer of wealth between generations in families.

How is this changing the nature of deal-making?

We’re finding now that more owners and operators who are buying, selling or recapitalizing their companies want to remain active investors instead of becoming passive.

The result is that a lot of ultra-high-net-worth families are looking to compete or collaborate with private-equity investment firms in deal-making. This trend has really picked up pace in the U.S., and we’re starting to see more and more of this here.

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How has the rise of the family office changed the deal-making picture?

For five or six years we have been presenting more content related to family offices. They’re part of the mix among capital providers along with M&A firms, banks and private equity firms of all sizes.

The other side of our membership is the service providers, all the leading companies that work with capital providers, top law firms, accounting firms, investment advisors.

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How does ACG help family offices?

We help provide family offices with access to resources and services, the same way we do with our other members. The family office sector is quite broad and fragmented. It’s starting to professionalize now — while in the past a family office might have relied on the family lawyer or accountant, they are hiring their own professional advisors now. Families are moving out of their core family group, because they find they need more resources for their operational structure.

Is networking important for family offices?

Through thought-leadership programs we help family offices learn more about what’s going on in the deal-making sector and how they can benefit from this knowledge. We also get people together so they can understand how they can work together. Our broader group of members can be resources, partners or simply experts who can help facilitate the deal flow.

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How important are these kinds of networking and professional development services to family offices?

There’s only a small percentage of family offices who have professionalized their services, and there are a lot of other entrepreneurs who have just sold businesses or come into money and are trying to determine how they should grow. We provide access to a broader audience for these types of family offices. Also, the smaller family offices can learn from those who have been in the sector for generations.

Has the pandemic changed things?

The pandemic has affected everybody everywhere, of course. In the deal-making area, after the sudden dip when the pandemic was declared [in March 2020] it led to two of the most successful years ever. There was a bull run in 2019 and I think ultimately the pandemic didn’t stop anything; there was a lot of money still out there to be invested.

For family offices, I think it broadened the horizons for many of them in terms of where they can look to invest and find new business opportunities. People started talking to other people that they wouldn’t have beforehand because they could do it virtually.

What are the hot topics among family offices and deal makers now?

Diversity, inclusion and human resource management are all big ones, and also environmental, social and governance (ESG) management. These are topics that would have been minor three or four years ago and now they’re huge.

The other big topics are technology and cybersecurity. And, of course, succession planning. A family office has to take all of these into account.

This interview has been edited and condensed.

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