With a mission to inform, empower, celebrate and advocate for British Columbia's current and aspiring business leaders, BCBusiness go behind the headlines and bring readers face to face with the key issues and people driving business in B.C.
Issue link: http://digital.canadawide.com/i/1184822
54 BCBUSINESS DECEMBER/JANUARY 2020 Canadian businesses in sectors such as energy, industrial manufac- turing and distribution, has noticed higher valuations for B.C. com- panies. In deals that Sequeira has worked on, they've commanded, on average, a premium of 2.5 times earnings before interest, taxes, depreciation and amortization ( EBITDA) compared to their Alberta and Saskatchewan counterparts. "There's still that premium being placed on B.C.-based busi- nesses, and a lot of that, we feel, is due to the diverse nature of our economy," McGuinness says. Purchasers will also pay more for existing manufacturing space because B.C.'s scarcity of industrial land makes it difficult to greenfield. At the same time, the province is reaping the rewards of a lower-growth environment in the U.S. that has left public com- panies trying to meet their expansion targets through M&A, McGuinness says. "B.C. has been a bit of a benefit in this last bull run, just seeing that investment from not only pri- vate capital but also some big corps." HSBC is busy, too, says Molenaar, some of whose clients have sold their companies to large U.S. private equity firms. "There's a lot of what I call trapped value in businesses here that over time could be a big contributor, as well, to overall investment in this marketplace." Gimme shelter I can afford Finlayson's prediction for B.C. real estate: land and housing prices will "keep growing faster than nominal income for as far as the eye can see." Because housing affordability plays a major role in quality of life for working families, governments must offer solutions by doing things like allowing more urban density, Yu reckons. Luckily, B.C. has many examples to learn from. Take Hong Kong, which has a much higher proportion of social housing than Van- couver. "We often do get stuck thinking we're unique and try to reinvent the wheel, but we don't have to," Ivanova says. "We can learn from the experience of other global cities that have dealt with it and have seen the pitfalls already." China reality check One big question for B.C. in 2020 is how Canada's testy relations with China will affect its prospects. At press time, Meng Wanzhou, CFO of Chinese telecom Huawei Technolo- gies, remained under house arrest in Vancouver, facing pos- sible extradition to the U.S. on charges including alleged bank fraud. Against a backdrop of rising trade tensions with America, the Chinese government has taken out its frustrations on Canada, blocking pork and canola exports, among other moves. "It's a wakeup call for Canada," Finlayson says of the realiza- tion that it's dealing with a rising non-democratic superpower. In his opinion, our nation has two qualities that make it an irresist- ible target for the Chinese Communist Party: "We're weak, and we're self-righteous." Play Invest Live Work