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PricewaterhouseCoopers LLP

Canadian Association of Movers Conference December 2007

Business Insights A Survey of Canadian Private Companies

Mauro FratarcangeliPartner

Private Company Services


PricewaterhouseCoopers Private Company Services Practice

• Hundreds of practitioners in 24 locations dedicated to serving private companies and their owners

• 65% of our client base is private companies

• Similar picture globally

• Networking and educational events dedicated to private companies

• 3rd annual Business Insights™ survey and Pulse Surveys to keep an eye on the trends of your business

Let’s Talk.


• 420 private company leaders

• Split nationally but concentrated around the main centres Ontario, BC, Alberta & Quebec

• Full range of industry sectors

Who are the respondents?

Business Insights - 2007


Exploring the key themes

What are the key trends since 2005?



0

10

20

30

40

50

60

Get a lotbetter

Get alittlebetter

Stay thesame

Get a littleworse

Get a lotworse

2005

2006

2007

The key trends 2005 -07: Confidence

How will your business develop in the next 12 months?


Overall confidence is the same as last year but a little more measured


Confidence by province

How will your business develop in the next 12 months?


0%

10%

20%

30%

40%

50%

60%

...Get a lotbetter

...Get a littlebetter

...Stay thesame

...Get a littleworse

...Get a lotworse

BC

AB

ON

PQ

All provinces remain confident that business will get better –


The key trends 2006 -07: Strategy

What single most pressing strategy to Canadian businesses?


Strategy 2007 2006

Growth / expansion

75% 70%

Survival 13% 15%

Consolidation 9% 11%

Exit 2% 4%


Strategy Ontario B.C. A.B P.Q

Growth / Expansion

82% 68% 69% 65%

Survival 10% 12 % 11 % 19%

Consolidation 2% 9 % 7 % 15%

Exit 2% 1 % 1 % 1%

The key trends 2006 -07: Strategy

What single most pressing strategies across the provinces?



How do companies plan to grow?

Growth strategy Ontario Nationally

New products/ markets 49% 56 %

Market share gain 41 % 48 %

Improved internal systems 24 % 33 %

Mergers and acquisitions 16 % 25 %

Buoyant economy 23 % 29 %

Decreasing competition 13 % 10 %



The key trends 2005 -07: Challenges

What are top three challenges nationally?

05

1015202530354045

Competition and discounting

Recruitment ofskilled staff/labour

shortages

Economy/lack ofactivity

Profitability/margins Currency/ exchangesrates

2005

2006

2007


Labour is a growing problem, across the board


Top challenges for Ontario looking back and forwards

Challenge2008

forecast2007

Competition / discounting 31% 32%

Labour shortages / Recruitment of skilled staff

25% 25%

Economy / lack of activity 21% 20%

Profitability / Margins 14% 32%

Currency / exchange rates 22% 31%





What are companies doing to grow?


What is in your strategy for growth?


Strategy Short term Medium term

Improved Processes 55 % 55 %

New Products and services

52 % 59 %

Organic growth 41 % 45 %

Enter new markets 41 % 48 %

Acquisitions 21 % 31 %

Selling overseas 21 % 23 %

Sourcing overseas 16 % 21 %



What are the most successful companies doing that makes them so successful?



The behaviours of the fastest growing companies



Correlating activity by company growth over 15%


Fast growing companies are more likely to report they

Are expanding overseas

Sell, source or have offices outside Canada

Consider themselves “very innovative”

Generate revenues from new products or in new markets

Are investing revenue in innovation related projects, IT and equipmentHave a significant percentage of staff working on innovation

Include product development and entering new markets in their strategy


Youthful exuberance is winning the day!



Correlating activities by age


More likely than the group average to

0-4 years Topline growth over 15%

Project business will get ‘a lot’ or ‘a little better’ in the next year

Develop and invest in new and innovative products

5-9 years Topline growth over 15%

Project business will get ‘a little better’ in the next year

10-19 years Increase profitability this year

Short term strategy includes expansion into new products or services

20-49 years Plan an acquisition in short and medium term

50+ years Report shrinking profits

Report they are ‘not innovative’


Exploring the key behaviours of successful businesses

• Displaying innovative practices

• Developing new revenue streams– Acquisitions– Global sourcing


Innovation is as simple as introducing something new


Growing by acquisition is linked to profitability


0% 20% 40% 60% 80% 100%

Yes, have undertaken acquisition

Yes, have undertaken more than oneacquisition

No acquisitions undertaken

PQ

ON

AB

BC

Have you grown by an acquisition in the last year?


Growing by acquisition

Are you planning an acquisition this year?


Ontario 30%

B.C. 28%

Alberta 28%

Quebec 33%



For the 30% of people interested in growing by acquisition, the biggest concerns are the negotiating the deal and integrating people

0%5%

10%15%20%25%30%35%40%45%50%

Negotiating thedeal

Integrating people Funding Redundancies




• 40% of companies with revenue over $10M are contemplating an acquisition in the next year

• The top reason is to open up new markets

0%

10%

20%

30%

40%

50%

60%

Open new markets Obtain key assets /capabilities

Acquire key talent Obtain cost &efficiency synergies

by consolidatingbusinesses

Acquire newproducts/services



Growing by leveraging global sources

• The most successful companies look to expand business outside of Canada

• The key driver for this move is no longer cost savings but access to a larger market

0%5%

10%15%20%25%30%35%40%45%50%

Larger market Lower cost suppliers Emerging/growingmarket



Sustainable business practices



Looking to the future – is climate change impacting your business?


Ontario and BC businesses say ‘No, it won’t ever impact my business’Alberta and Quebec are already seeing the affects

ON BC AB PQ

Yes, it is beginning to affect me 33 % 33 % 49 % 44 %

No, it won’t ever 48 % 46 % 33 % 38 %

Expect in the next 1-2 years 7 % 1 % 4 % 5 %

In 3+ years 11 % 28 % 15 % 12 %


Do you see more evidence of interest in environmental issues in your stakeholder groups


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Customers Suppliers Employees Localcommunity

Media

BC

AB

ON

PQ


What’s the message for companies?

• Private companies are confident and successful

• But success in magnified when companies are prepared to take risks to maximize the opportunities presented to them

• It is by generating new revenue streams that businesses will achieve the fastest growth in the medium and long-term


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