There is an article today in the TJ where a Fredericton businessman worries the “province risks losing its head offices as business leaders look abroad for companies to acquire their firms.”
This is not as cut and dry as some will say. This paranoia over foreign ‘takeovers’ is much exaggerated. Sure there is risk but there can be considerable reward from becoming part of a national or international firm. GTech buys Speilo and grows it. The former owner banks a couple of hundred million and sprinkles much of it around New Brunswick. On the flip side, Oracle buys Whitehill and we are unsure of the final outcome.
The truth is that New Brunswick can’t try and insulate itself from the global economy. We have tried this and how’s that working out? I looked at this and by my calculation New Brunswick has the lowest percentage of firms either publicly traded or with non-bank capital sources from national or international sources. We could use an infusion of cash and the kind of market development opportunities that come from being better connected internationally.
As usual the New Brunswick ‘thinkers’ get this wrong in this article but the expert from McMaster gets it bang on:
Benson Honig, an entrepreneurship professor at McMaster University’s DeGroote School of Business, agreed that encouraging startups is of greater concern to jurisdictions across Canada that lack the scale of investment available in the United States – over succession planning for existing firms. “In my view, the premier of New Brunswick should be thinking, ‘How come we don’t have 50 new startups in a year,’ instead of worrying about, ‘Who’s buying our old companies,'” Honig said.
This is the fundamental issue. Not whether or not a few of the “old faithfuls” like Neill and Gunter get bought out.
And by the way Honig is not talking about mom and pop start ups. He is talking about 50 new Whitehills or Speilos. That is what will drive the economy and if a few of them get bought out by global firms, clap clap. Don’t spend it all in one place.