Keepin' It Real

Image: Harley Davidson

Image: Harley Davidson

"It was a Friday afternoon, our receptionist almost never let him in. He parked his Harley Davidson outside and came inside - to the waiting area. He wore a leather jacket with shorts and bright coloured socks, in sandals-on a motorbike, a Harley Davidson- socks didn't match.

Let's call him Bob (to protect his identity). Bob was from Calgary. He loved the motor bike ride down to Medicine Hat which was where our head office was located. Bob arrives unannounced and the dust settles.

The receptionist enters our work area, asking if I have a moment to meet a visitor. 

At the time our company was doing really well. We had our first $1 million dollar month, and we celebrated. Monthly revenues were growing. Natural gas price was on a tear, soon to reach the $12 per mcf range, a historic high. And we had just finished a 60 well drilling program that would triple our companies' production. We were now listed on Canada's TSX public market exchange.

I go out to meet Bob and invite him into our reception area. I ask if he has been offered something to drink? He says no, I flash a look of disdain at the receptionist.

Hospitality was key to our business model. 

www.purebookkeeping.com

www.purebookkeeping.com

Luckily we had beer in the fridge. (Yes, my companies have beer in the fridge) Which totally quenched Bob's thirst. We meander into the board room.

It turns out Bob's an investment banker, involved in a fairly large equity fund. He has been watching our company, and checking the facts. Bob liked what he saw and traveled out to the Hat to see if we were the real deal and to invest on behalf of his fund. By the afternoon, the negotiation had come to an end. I held in my hand, a check for $8 million dollars. Bob's fund became a significant shareholder in our company.

We all sat there, after Bob left kinda stunned. For years we scratched and promoted our company. Not once was the equity investment process easy. Long days, multiple pitches, grueling dog and pony shows, but that's the life of business.

Bob did well off that investment as our company grew to a couple hundred million in value. The company that bought us out went on to multi billion dollar value. That was back in the heady income trust days of Canada's equity markets. What a shame that Canada's government had to destroy that business model.

I will always have the greatest respect for bankers like Bob. Except of course for his fashion sense. Bob had a winning strategy: seeking out relatively unknown opportunities and coming to the table with serious cash. That's the way business used to be done, even guys like billionaire Warren Buffet built an empire following that principle.

If you are young and pursuing a similar investment banking career, follow Bob's model. Look for opportunities of undervalued companies off the beaten trail. Invest in companies that build, produce, or construct. Stay away from hype, and most importantly get out of your office. Not all learning takes place behind a computer screen."
 

Image: Medicine Hat Chamber of Commerce

Image: Medicine Hat Chamber of Commerce