Canaccord Capital Corp., Canada’s largest independent investment dealer and a Howe Street institution, is rolling in good news: revenues are up, profits are moving in the same direction and its new London office is slammed with business.
Pretty bullish, yet at this moment, boss and founder Peter Brown does not look impressed. That could be because the gruff and driven 63-year-old with a gravelly voice and intimidating glare has found himself sitting across the table from a journalist. Now that the company is public, you might expect Brown to emerge from behind the cloud of cigarette smoke in his office to speak with reporters on a more regular basis to give the company more personality in the eyes of potential shareholders. But he rebuffs the press as much as he always has, preferring to spend his time running the company he and a partner bought for $23,000 in 1968 and today cranks out revenues of over $430 million. During the 45-minute interview in the immaculate 22nd-floor boardroom of the downtown Canaccord Tower, Brown, casually dressed in a crisp white monogrammed shirt whose top three buttons are unrestrained, puffs away on Players Light cigarettes and talks about how his company plans to tap the U.S. market, triple its share price in three years and navigate a growing maze of overzealous securities regulation. How has your life changed since Canaccord went public in 2004? In running our business, the decisions we make, interacting with our clients and staff and all the issues related to our business, nothing has changed. What changes is that you have a substantial group of new partners, public shareholders, and they need to be not only included in the information, they need to be educated in our business. But what does that mean for you, day to day? It adds 20 per cent to my workload. It’s a hassle? No, just more work. The decision-making process in our business has not changed at all. How we report it, record it, include our management committee and independent directors has changed a great deal. There’s more recording of what we do, more public relations in what we do and there’s more expense. Why did you go public? Some of our competitors went public and having public-company currency to make acquisitions is important. Also, we did not want to be taken over by a bank. The people who have joined us over the years have come because they do not want to work in the bank system. We want to give them liquidity and remain an independent broker. We are 60 per cent employee-controlled. It’s a family environment here and the culture is very important. Our people are our most important asset. I spend a lot of time worrying about that issue and the well-being of the people working here. That’s what all CEOs say. Well then most of them aren’t telling the truth. I really mean it. What acquisitions are you considering? I can’t tell you that. But we intend over the next four to five years to double our revenue and profits again. Most of that kind of growth will come by acquisition. My guess is a couple of retail acquisitions and one or two institutional acquisitions. We’re also willing to look at other areas, not directly in our business but allied in our business. Such as… It could be a consulting firm with a particular expertise, like a business consulting group in energy or technology. Where are you looking? We are in Europe and Canada and we have said we would look at trying to buy an institutional firm in the U.S. The big opportunities are in the niche areas and that is our strategy, to look for a small, mid-cap firm like our own and do there what we do well. Now we’re doing about $50 million in the U.S. from here – we could do $200 million in revenue and London could get to the same. Our office there is the best operation any Canadian dealer has ever had in Europe. The big difference is that many go in solely to sell Canadian securities into London. We went in to build a London-based business and half our underwritings are now European companies. Any industries you’re considering? We’ve built a whole energy team and it’s had a huge payday, we’ve been in good syndicate positions we’d never have been in because of it and we’ve become an important factor in the energy finance business. We could do the same with alternate power or chemicals – we could bolt on a sector to our operation at any time. Is there one you’re considering? I wouldn’t tell you. The creation of a national securities regulator modeled after the SEC is a hot-button issue. Where do you stand? We report to 17 regulators now, so we are a huge fan of intelligent regulatory reform in Canada, as is the head of the B.C. Securities Commission and the new chair of the TSX. Being public adds a lot of cost and a lot of work. In the post-Sarbanes-Oxley environment, some of the regulatory requirements I think would generally be recognized today by most sophisticated people as insane. I’d say they’ve gone way too far, add unnecessary costs and they restrict. In the U.S. today, one of the big fears is that businesses are not taking the intelligent risks needed to grow. This type of regulation, and the litigation the U.S. is famous for, is making boards of directors in the U.S. risk-averse. Over time Americans may wake up to find it’s limiting the growth of American business. You feel the pendulum has swung too far. Very much. It’s a huge cost and not much shareholder value. I think it’s an over-reaction at a huge cost to the American economy. Dishonest people will scheme to be dishonest. I think over time if there aren’t amendments and changes to it, New York may well not be the first choice for the global players to list. Can we talk about your early days? You flunked out of UBC. Where did you get that? You mentioned it in a speech once. Can you tell me about your early years as an entrepreneur? I started with Greenshields in 1962 and co-founded Canaccord in 1968. What do you do when you’re not working? I’m not giving you that personal stuff. We’re here to talk about Canaccord. Any plans to wind down your day-to-day involvement? No. I’d like to be here until I die.