Consultation on the future of competition policy in Canada
The key findings from our survey are:
- Small businesses are increasingly dealing and competing with larger companies
- The increasing size of companies is making it harder for small businesses to compete
- Small business is increasingly affected by concentrated industries
- Small business owners see mergers and acquisitions as a driver of these issues
- Small businesses want more active government engagement to ensure they can compete in a fair marketplace
Social Capital Partners appoints Matthew Mendelsohn as new CEO
TORONTO, Nov. 29, 2023 –Social Capital Partners (SCP) today announced the appointment of Matthew Mendelsohn as its new CEO, effective January 2, 2024. Jon Shell, SCP’s current Managing Director will become SCP’s Chair.
Matthew is a Canadian public policy leader. For over 25 years, he has designed and implemented public policy solutions that work in practice and has advised governments, organizations and elected leaders on ways to improve economic, social and democratic outcomes. Matthew is a former deputy minister with the governments of Canada and Ontario, and was the founding Director of the Mowat Centre, a public policy think tank at the University of Toronto. Most recently he was a Visiting Professor at Toronto Metropolitan University and a Senior Advisor at Boston Consulting Group.
“Matthew is the ideal leader for our new chapter as we pursue our next big ideas,” said Bill Young, Founder of SCP. “As SCP enters its next phase, we will focus on transformational public policy. Our goal is to drive changes that will confront wealth inequality, the thickening barriers to intergenerational mobility, and obstacles to asset ownership for many Canadians.”
In describing SCP’s next phase, Jon Shell, added: “Good public policy can expand opportunities for Canadians to own businesses, homes and assets. Canada can continue to deliver on its promise, but we must do more to combat the financialization of our economy and create more opportunities for Canadians and communities to build wealth.”
“I have long been a big admirer of SCP and its relentless focus on having a positive impact on the lives of Canadians through concrete action, focused investments and coalition building,” said Matthew. “Rising wealth inequality is corrosive to democratic societies and diminishes all of us. The Canadian dream must remain a realistic aspiration for more Canadians, and public policy needs to catch up to the structural realities of our economy. SCP can help drive this work.”
“Good public policy can expand opportunities for Canadians to own businesses, homes and assets. Canada can continue to deliver on its promise, but we must do more to combat the financialization of our economy and create more opportunities for Canadians and communities to build wealth.”
A positive vision for the future of Canadian competition policy
We believe that five key economic outcomes can be achieved with the support of robust and active competition policy. This is not a complete list, but offers some of the best examples of how the Act is failing today, and why it is important for this review to be ambitious in its recommendations for a renewed Canadian competition regime. These outcomes are:
- Increased Entrepreneurship and Innovation
- Stronger Small Businesses
- Improved Job Quality
- Resilient Supply Chains
- Lower Prices
Inclusive search fund concept paper
“We’re concerned that search funds lack diversity, industry experience and appropriate incentives. According to research from Stanford, approximately 95% of searchers are men and 80% are MBA educated. Very rarely do searchers have prior experience in the industry or the community they buy into.”
Building an employee ownership economy
“EllisDon owes a lot of its success to employee ownership – we are 100% committed to it. There should be much more of this in Canada.”
Taylor Guitars’ transitions to 100% employee ownership with support from the Healthcare of Ontario Pension Plan (HOOPP) and Social Capital Partners (SCP)
TORONTO, Feb. 16, 2021 –Taylor Guitars, a leading global builder of premium acoustic guitars based outside San Diego, California has transitioned to 100% employee ownership. Backed by a Canadian pension fund, Healthcare of Ontario Pension Plan (HOOPP), and Canadian non-profit Social Capital Partners (SCP), this is a landmark transaction where a pension fund has directly financed an employee ownership conversion with a flexible, long-term debt facility.
Taylor Guitars views the transition to employee ownership as the next step to ensure a sustainable future for the company, while also providing a valuable financial benefit to people who have contributed to its success. “We believe we’ve created a special company, where passionate people can engage in problem-solving innovation, collaboration and respect” said Kurt Listug, co-founder and Chief Executive Officer “Securing our independence through a 100% Employee Stock Ownership Plan (ESOP) allows us to strengthen this culture.”
The transaction was financed with debt from HOOPP, SCP and the owners themselves. “We evaluated a number of potential financial partners, but it was key to us to work with someone who shared our values and long-term outlook. HOOPP and SCP stood above the rest as partners who care deeply about the success of our company and its employees, and feel the same way we do about our environmental and social objectives.” Bob Taylor, co-founder and President, Taylor Guitars.
“We are committed to seeking partnerships with market-leading companies with strong growth potential and a stellar track record of innovation and growth” said Jim Walker, Managing Partner at HOOPP Capital Partners. “And the ESG aspect of this transaction is also appealing given Taylor’s environmental sustainability initiatives and the fact that our capital will be invested to help create a prosperous future for Taylor Guitar employees who now own the Company.” he added.
SCP notes that a similar transaction would be impossible in Canada, as there is no equivalent to the Employee Stock Ownership Plan (ESOP) structure available in the United States. As a result, Canada has very low levels of employee ownership. Social Capital Partners looks to change that and are campaigning for a better regulatory environment that includes a defined structure and targeted incentives, as exist in both the United States and the United Kingdom. The proposed changes would allow for a significant increase in broad-based employee ownership in Canada, which would in turn foster growth and keep jobs in local communities.
“Employee ownership has been studied in the U.S. for decades. Employee-owned firms grow faster, default less often, are far more resilient in economic downturns and pay their people more, even before you factor in the wealth-generating effects of ownership. It’s also a great business succession option as it lets owners exit for fair prices while protecting the people and communities they care deeply about.”
SCP started advocating for employee ownership because of the proven social and economic benefits of employee ownership. “Employee ownership has been studied in the US for decades. Employee owned firms grow faster, default less often, are far more resilient in economic downturns and pay their people more, even before you factor in the wealth generating effects of ownership,” said Jon Shell, Managing Director & Partner of Social Capital Partners. “It’s also a great business succession option as it lets owners exit for fair prices while protecting the people and communities they care deeply about.” he added.
About Taylor Guitars
Taylor Guitars was founded in 1974 by Bob Taylor and Kurt Listug and has grown into the leading global builder of premium acoustic guitars. Taylor now employs over 1,200 people and currently produces hundreds of guitars per day in its state-of-the-art factory complexes in both United States (El Cajon, California) and in Mexico (Tecate). The company maintains an active dealer network, with Taylor guitars sold through hundreds of retail locations in North America and with international distribution to 60 countries, including a distribution warehouse and factory service center in the Netherlands.
About Social Capital Partners (SCP)
Founded in 2001 by entrepreneur and philanthropist Bill Young, Social Capital Partners (SCP) is an independently funded non-profit that designs and implements systemic ideas to tackle social problems. SCP initiated their Employee Ownership Capital project in 2019 to link institutional capital to employee ownership conversions in the United States using the Employee Stock Ownership Plan structure. The transition by Taylor Guitars to 100% employee ownership is the project’s first transaction. SCP is campaigning for a targeted employee ownership policy in Canada. For more information see employee-ownership.ca.
About Employee Stock Ownership Plans (US-ESOP)
The US-ESOP is a type of tax-qualified defined contribution plan available in the United States through which all qualified employees receive a retirement benefit linked to Taylor Guitars’ future equity value. Taylor Guitars will be joining over 6,400 other successful ESOP companies, such as Clif Bar & Company, King Arthur Flour Baking Company, and W.L. Gore & Associates, which are committed to their independence, their values, their employees, and providing the best quality, innovation and service to its customers and external partners. More information about ESOPs can be found at esopinfo.org. Chartwell Financial Advisory, Inc. advised Taylor Guitars on all aspects of the ESOP transaction and creation of the optimal ESOP capital structure.
Business-in-a-box concept paper
“Research suggests that COVID-19 is accelerating the greatest wealth transfer in the history of retail, worsening the already unequal distribution of ownership in our society.”
Rate drop rebate: final evaluation report
“We were trying to market a product called ‘community hiring’ through a channel – banks and credit unions – that had never marketed a product like this before, to a customer base – small- and medium-sized businesses – who had never done community hiring before. We knew no matter how carefully and thoughtfully we designed this, it would not work seamlessly on the first try.”
Ontario launches rate drop rebate in London
Ontario is launching an innovative partnership with financial institutions to help businesses in London grow and increase employment opportunities for people with disabilities and facing other barriers. Through the new Rate Drop Rebate program, small- and medium-sized businesses that hire eligible people can receive discounted rates on financial products, such as loans. The rebate is made possible through funding from Ontario’s two-year, $4-million Community Loans Fund.
“We want to foster a more inclusive society in London and across Ontario. Rate Drop Rebate is a win-win program. It will help local businesses get the financing they need to grow and it will provide important job opportunities for capable people who are sometimes overlooked in the job pool.”
Ontario financial institutions and government join forces to boost local businesses and do good in communities
TORONTO, Apr. 11, 2016 – A new financial product being offered through a handful of banks and credit unions in Hamilton, London and Ottawa will give qualified business owners the opportunity to lower the interest rate on their business loans or lines of credit, and provide free assistance with hiring. This partnership is expected to significantly impact the three communities by offering disadvantaged population groups improved access to local employment opportunities.
“Rate Drop Rebate is a financial product that rewards Ontario’s business owners for the steps they take to grow their operations, helping them save time and money and improve cash flow with a cash back interest rebate,” explains Bill Young, business entrepreneur, philanthropist and founder of Social Capital Partners, the social finance organization that developed Rate Drop Rebate.
“Rate Drop Rebate helps businesses that hire people facing barriers to employment. This is expected to help generate up to 1,100 new employment opportunities in Ontario, contributing to a stronger local economy for all.”
“Rate Drop Rebate is an excellent way to connect small businesses with attractive financing terms and to help increase employment options for people with disabilities and others who face barriers when looking for work”
For every new employee hired through Rate Drop Rebate and retained for a minimum of six months, business owners will receive a cash back rebate equivalent to a 1% reduction in the interest rate on their term loan up to a maximum interest rate reduction of 4%, or the actual interest paid over six months on the business’s line of credit up to a maximum of two years interest-free.
The Government of Ontario’s Ministry of Economic Development, Employment and Infrastructure is partnering with Alterna Savings, CIBC, First Ontario Credit Union, Libro Credit Union and Meridian to deliver Rate Drop Rebate.
“Rate Drop Rebate is an excellent way to connect small businesses with attractive financing terms and to help increase employment options for people with disabilities and others who face barriers when looking for work,” says Brad Duguid, Minister of Economic Development, Employment and Infrastructure.
“We are proud to partner with these forward-thinking financial institutions on Rate Drop Rebate. Together, we are promoting a culture of inclusion and strengthening our economy.” Those facing barriers to employment include students with limited work experience, long-term unemployed, older unemployed, people with disabilities, newcomers to Canada and unemployed Indigenous persons.
Based on a program by Social Capital Partners that placed 480 people in jobs, this unique product links a social purpose to a financial product by bringing together business borrowers, financial institutions, and the Ontario government to help individuals facing barriers to employment.
To qualify, business owners must:
- Run a for-profit business with a physical address that lies within the boundaries of the City of Hamilton (including Ancaster, Stoney Creek, and Binbrook), City of London (including Middlesex County), or City of Ottawa.
- Have or need a term loan or line of credit, which must be obtained through a partnering financial institution.
- Be currently hiring or have an anticipated need for an entry-level position(s) with a minimum of 20 working hours per week.
- Fill the position through the Rate Drop Rebate hiring channel between now and October 31, 2017 and retain the new hire for a minimum of six months.
- Register for Rate Drop Rebate by April 30, 2017. “Small businesses are significant contributors to the economic development of the communities in which they are established. In addition, they help stimulate growth by offering local employment opportunities,” explains Young.
Rate Drop Rebate Recruitment Liaisons will be screening all job candidates to ensure they meet the job requirements and are the right fit for the company. “This is especially helpful for a business that might not have an existing HR department,” Young says.