September 12, 2017                     Next Issue: Tuesday, September 26
In this issue :
Curiosity, Imagination & Passion - Business Owner Focuses!
and seven commentaries on news articles
relevant to business transition and valuation.

Curiosity, Imagination & Passion: Business Owner and Advisor Focuses!
Ian R. Campbell, Business Transition Counsel Inc.
In This Issue
It is said, "answers don't change the world, questions do".

Curiosity, imagination and passion are three of hundreds of identified personality traits. All three:

1.    are increasingly important in the contexts of the ongoing success of individual businesses and related professional advisory services.
2.    with various levels of intensity - inspire questions, and hence in a business context enable individuals to better manage complexity, identify problems, find solutions, spawn new and improved results and contribute to problem identification and resolution.

Intellectual quotient and emotional quotient are increasingly things discussed in the context of business strategy, management and transition. Less frequently talked about are a person's curiosity quotient, imagination quotient, and business passion quotient. But readers may hear more about these and other personality traits going forward - and may benefit from focusing on those three personality traits when assessing business owners, managers, employees and addressing business opportunities and challenges.

The mythical Sherlock Holmes had a passion for solving complex crimes, and a curiosity and an imagination that enabled him to do that. This article highlights the importance of curiosity, imagination and passion in the context of business enterprise success and successful transition.

Curiosity, imagination and passion: what are they?

Curiosity refers to having or showing an interest in learning.....
Our book 50 Hurdles: Business Transition Simplified gets terrific reviews - read testimonials. Visit now to buy your copy. Read it, and then use it as a reference tool.
News Headlines, Article Links, Curation
 Ian R. Campbell, Business Transition Counsel Inc.

In the past two weeks the following articles relevant to Business Transition and Valuation have been selected from a population of approximately 5,000 articles.

Selected articles and curation comments are organized under the following headings:
Business Transition News, Business Valuation News, Technology News, Economic News, and Financial Markets News.
Please forward to a friend or colleague!

Business Transition News

Chinese merger creates the world's biggest power group with $271 billion in assets. Reading time 3 minutes. Business Insider, August 28, 2017.

Comment: This article discusses the recent merger between China's biggest coal producer and a top-five Chinese state power company. While interesting in itself, the far more interesting thing all business owners and their advisors ought to focus on is ongoing business consolidation generally.

Based on daily news headline reviews and discussion with business owners business combinations continue apace. It is important business owners and advisors keep a careful eye on competitor business combinations, and also on business combinations among their suppliers and customers.

Our current and prospective economic and technological advances environments are among other things promoting increased industry competitiveness - and, or so I think - increasingly favoring larger and consolidating businesses over smaller businesses in many industries.

This is something to watch carefully as business owners strategize the business transition route best for their businesses and for their families. 
Business Valuation News

No business valuation news articles are included in this issue of the Business Transition and Valuation Review.
Technology News

Human + machine: A new era of automation in manufacturing. Reading time 6 minutes, thinking time longer. McKinsey & Co., September, 2017.

Comment: This article sets out data accumulated by McKinsey from a study of manufacturing work in 46 developed and developing countries. The study is said to canvas about 80% of the global workforce. It is said to show that in 2015, 64% of about 750 billion hours spent on manufacturing-related activities were capable of being automated with "currently demonstrated technology".

The article includes a chart that shows what McKinsey believes to be the percentage of "automation potential" for 19 industry sectors, where each sector is broken down by 7 "activity types". Automation potential ranges from a high of 73% to a low of 27%.

The article does not speak to further automation as a consequence of ongoing technological advances, nor does it speak in any conclusive way to the impact of automation on employment.

The article is one every business owner and advisor to business owners ought to read, along with a second McKinsey article also just published titled Automation, robotics, and the factory of the future.

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Comment: Just when business owners, advisors and everyone else thinks things can't get more complicated, they do. Cybersecurity is not a new issue. However, like all things related to technology and technology advances, cybersecurity is becoming an ever larger concern.

Hence this recent McKinsey article is worth the time of business owners and advisors to read and think about. The following are the six ways McKinsey says CEOs (read business owners) can promote cybersecurity focus:

1.    Understand what LoT security will mean for your industry and business model.
2.    Set up clear roles and responsibilities for LoT security along your supply chain.
3.    Engage in strategic conversations with your regulator and collaborate with other industry players.
4.    Conceive of cybersecurity as a priority for the entire product life cycle, and develop relevant skills to achieve it.
5.    Be rigorous in transforming mind-sets and sills.
6.    Create a point-of-contact system for external security researchers and implement a post-breach response plan.  
Economic News 
Canadian job gains beat expectations in August. Reading time 3 minutes. The Globe and Mail, August 8, 2017.

Comment: Is a part-time job equivalent to a time-time job? Apparently Statistics Canada thinks it is.

On September 8 Statistics Canada said that in August Canada unemployment rate dropped 0.1% to 6.2% in the face of creation of an incremental 22,200 jobs. This where 110,400 part-time jobs were reported as having been created, while 88,100 full-time jobs were lost. And this where 48,100 workers over 54 years of age gained jobs, and 32,800 workers between 15-24 years of age lost jobs.

Canada's revised unemployment rate of 6.2% is reported to be "the lowest since the Great Recession knocked the wind out of the country's job market". Assuming that to be arithmetically right, one might nonetheless wonder what a detailed analysis of the unemployment rate components at the two dates might show by way of comparative difference.

While 'one swallow does not a summer make', one might also wonder whether the Bank of Canada jumped the gun by raising its benchmark interest rate two days before Canada's August employment statistics were released.

Business owners ought to look to see what they can do to strengthen their balance sheets in the short-term - if they haven't already done that.    

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Catalan authorities call independence vote. Reading time 1 minutes. EU Observer, September 7, 2017.

Comment: On September 6 the Catalan parliament approved a bill that it is said will result in an October 1 independence referendum.

Catalonia is the four province north-east region of Spain contiguous with the south-west of France. It is home to about 15% of the Spanish population.

For some years Catalonia has been threatening to hold an independence referendum, consistently in the face of Spain's parliament claim that such a referendum "is illegal and that it will stop any kind of threat to the unity of Spain".

Measured by nominal (inflation included) gross domestic product, Spain is the fourth largest economy in the 19 country Eurozone, and the fourteenth largest economy in the world.

What is happening now in Catalonia and in Spain is well worth keeping one's eye on. 
Financial Markets News

Overnight Markets: Wall Street gains as North Korea fears ebb. Reading time 3 minutes, thinking time longer. CityWire Money, August 30, 2017.

Comment: Business owners and advisors might want to read this article - then decide whether the reasoning expressed for financial markets behavior can possibly be right. If you think it might be, consider financial market efficacy in the context of business value - which is properly based on long-term (read multi-year to infinity) discounted free cash flows - where:

1.    No event in the past two days has suggested North Korea is backing away from its ongoing ballistic missile program - in fact the opposite seems more likely.
2.    It is hard to imagine Donald Trump either waving his arms thus holding the Houston floodwaters back, or walking on them.
3.    The Investment Banks, too big to fail in 2008, now have to be even "too much bigger to fail" in 2017.
4.    Many people who actively report on the financial markets may well have been high school cheerleaders who love being the center of attention. This where some of them talk about the equity markets "flirting with new highs", or "recovering from early day lows only to recover to new highs".

That said, there can be little doubt the central banks are motivated to do what they can to ensure financial market stability, minimal volatility, and no major sell-off. One might reasonably think a good summary to be "and the game of musical chairs continues".    

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Comment: Companies in the United Kingdom (UK) have not been required to publish Interim Management Statements (IMSs) since 2014. IMSs, the most common form of UK quarterly reporting, are similar to - but require less information than - U.S. style quarterly reports. The 2014 UK change followed from an earlier European Union (EU) decision to remove after November 2015 required IMS type quarterly reporting from companies that issue shares in the EU.

The referenced September 4, 2017 article reports that "now more than 40% of FTSE 100 companies and 60% of FTSE 250 companies no longer issue quarterly reports to shareholders". The theory behind non-reporting is said to be that the practice of quarterly reporting causes businesses that report quarterly to engage in short-term strategies that promote meeting quarterly targets rather than developing long-term strategies.

That quarterly reporting promotes short-term strategies over long-term strategies has to be correct. However one can only wonder what elimination of quarterly reporting - if broadly adopting in all financial markets including the U.S. - would mean to investors and the equity markets. To the extent there currently is a 'pin the tail on the donkey' aspect to - in particular - short-term equity markets "investing" today, it is easy to argue the game would change to "pin the tail on a humongous elephant that would include standing on a large and somewhat shaky stepladder".

If interested in reading further see What does the future hold for interim management statements?, an undated PWC article.  
Newsletter Contributors
Ian R. Campbell is the principal contributor to this Newsletter. He has given business valuation and transition advice to both public and private company owners for over 40 years. Other contributors are experts in business transition or specific disciplines relevant to business transition and valuation. They take part in Q&A sessions posted on
Newsletter content ('Content') does not constitute individualized business transition, valuation, economic or investment advice. The ideas, views and opinions expressed in the Content are solely those of the authors/contributors. Provided 'as is', Content may change without prior notice, may be incomplete, inexact, incorrect or jurisdictionally specific. It is used at the reader's own risk.