Ken Fowler does not move financial markets like Warren Buffett, the fabled chairman of Berkshire Hathaway.
He does not make headlines like Gerry Schwartz, the man behind Onex Corp.
He does not wine and dine celebrities on yachts like Jimmy Pattison, the sage behind the Jim Pattison Group.
He doesn't even have an office on Bay Street.
|Simon Wilson, Business Edge|
|Ken Fowler's private equity firm has built a diversified investment portfolio, including restaurant company SIR Corp., which operates Jack Astor's. |
Yet, when it comes to entrepreneurial savvy and reputation, Fowler wouldn't be out of his league in the company of some of North America's most celebrated tycoons.
From his office in his native St. Catharines, Ont., the president of Ken Fowler Enterprises (KFE) directs a diverse portfolio of North American investments, drawing on more than half a century of experience.
Starting from humble roots and armed with a Grade 10 education, Fowler cut his teeth in business in the 1950s as a photo studio owner and real estate salesman in St. Catharines and eventually made his mark as a real estate broker, builder and developer.
In 1972, he founded Ken Fowler Enterprises and has built the private equity firm into a conglomerate with investments worth more than $100 million with annual revenue exceeding $1 billion from real estate companies such as Maracay Homes, restaurant mainstays such as Earls and Jack Astor's, and upstart retailers such as West 49 and J. Michaels.
Following this interview, Fowler checks his watch. He is late for a 5 p.m. business meeting. He politely excuses himself.
"Sorry, gotta run," he says, and the 70-something entrepreneur races to his limousine.
When you're Ken Fowler, there is always one more appointment. And perhaps one more deal.
1. How far did you go in school?
"I only ended up getting my Grade 10. I was very, very motivated to get on with my career in business. When I speak to students at Brock University, they ask me about my education. But I tell them that if I were able to go to university and learn what you folks are learning, I would have just gotten there a lot faster. In my day, you needed time and financial ability to go to university. And you're highly motivated to start a career when you don't have any money. I grew up in the worst part of St. Catharines and in those days, you were lucky if your dad had a job in some major corporation where you could get in. But when you don't have money early on, I think it motivates you to get out and get going. My dad was not a businessman. He worked as a plasterer."
2. When did you become interested in being an entrepreneur?
|Ken Fowler reflects on a successful entrepreneurial career.|
"I was quite young. My first business venture was as a newspaper carrier. I was 11 or 12. I learned how to grow it. It got so big after a while that I had to get other kids to carry the papers. When I sold that business, I made more than I bought it for. That was my first capital gain. My first real job was as an office boy in a factory, but then I got into the photography business. I bought a little studio with some help from a relative, grew that business, sold it and then I got into the real estate business. My father-in-law at that time was an insurance agent and I got my real estate licence through him. I became a salesman and within a year I was a (real estate) broker. Before too long, I became the largest real estate broker in St. Catharines. Eventually, I sold Fowler Real Estate and got into a lot of businesses, as a home builder and developer. I was in a lot of businesses, so in 1972 that's how Ken Fowler Enterprises got started. My accountant said, 'Hey, you'd better put these under one roof.' " 3. What was your vision when you started Ken Fowler Enterprises?
"You know, I didn't have a vision. When I give talks on entrepreneurship, I tell people that the word entrepreneur was virtually never used in those days. It wasn't in my mind. I just saw business opportunities and it evolved into a business. The company (KFE) started with $1."
4. How would you describe your investment philosophy?
"We always say there are three parts to a deal. It takes an idea, capital and people. But there's really only one thing that's important and that's people. You can have a McDonald's restaurant at Queen and Yonge in Toronto, and if you've got the wrong guy running it, you're going to blow your brains out. But you could have a restaurant that is not very good at a location that is not very good, yet if you've got the right guy running it you can be successful. We look at almost any reasonable investment. Our strength is to first identify how the business fits and then look at how it's capitalized. We provide mentoring and guidance, but we do not run any business. It's absolutely critical to us to have quality people running the business. If you don't have the right people running a business, you can get yourself into serious trouble. It's people that make all the difference. We like to think that we help people make good decisions, help them grow, help them become well capitalized and eventually manage their exit too, if that's necessary. I'm a little bit like Warren Buffett in that I've come to the conclusion that as long as you're getting great returns, you don't necessarily have to sell, unless you've got another place to put your capital or unless you feel your position in the industry is going to become a concern."
5. Buffett is regarded by many as the world's greatest investor. What's your view of his investment style?
"He looks for good investments, but also looks for great people in management. The guy's brilliant and smart. I truly believe that (identifying strong management) is a key to what he does. At one point, there were some people interested in buying West 49 (a business Fowler co-founded 1995 and helped take public in 2004). I always remember saying to them that I almost don't mind selling the company, but I'd rather keep the people (management). That's because I could have turned around and found some other venue in retail for my senior partner in West 49, who is a great merchant (West 49 CEO Sam Baio). They're hard to come by. I know he could do it again with the right product and be off to the races."
6. What in your mind makes a great leader?
"A great leader has got to have passion. He's got to have huge passion like Sam Baio or my son Peter (Peter Fowler is CEO of SIR Corp., the restaurant company). All of these people share the same attributes. They are very passionate about what they do and they want to be the best at what they do - the best retailer, the best restaurateur, the best builder and so on. And because they're so passionate and it's their love, they put a huge amount of work into what they do. I think they're also humble to the extent that they don't have huge egos that push them over the other side. They respect the fact that there are other people who are good in the business and they've got to watch out and look over their shoulder, so to speak."
7. How much of a premium do you place on ethical business conduct?
"Oh, that's No. 1, really. It's huge. That flows in all directions. You have to be ethical naturally in the business you're in, with the people you do business with as customers, the people that you work with and your suppliers. Good businesses are built around relationships - relationships with your customers, relationships with your employees and relationships with your suppliers. You have to be firm - you're not going to be a pushover - but you can still be fair and ethical."
8. What are your thoughts about the rash of white-collar crimes in recent years?
"Oh, my goodness. When you're that good and that smart and that rich, why do they do it? There's no logic in doing things like that. It is mind-boggling to me. To me, there's huge joy and pleasure in seeing a business become successful in the end. I'm long past doing this to make money, as you must know. I mean, I can live the lifestyle I want without continuing to work. But I truly enjoy what I do. And I truly do enjoy seeing a business grow and be successful for everybody involved in it."
9. How important is the issue of exorbitant executive pay when you research a company as a prospective investment?
"It drives me crazy. I don't believe in overpaying. Here's how I look at it. If someone is hit by a truck, what would it take to replace them? When I sit around a boardroom, I always say this: 'We are sitting here as directors and it's as if every single shareholder is also sitting in the room. We just happen to be the ones picked to manage the shareholders' money for them.' When we start paying people some outrageous salaries, outrageous stock options or outrageous bonuses, I think it's wrong. I can see compensating people for huge success when they're also making shareholders a huge success. Most of the people (managers) we're involved with are compensated more on success. Their base salaries are not very high but there are some good bonuses available."
10. What's the key to successful deal-making?
"What's important is fully understanding what the transaction is all about and understanding the people you're dealing with. If you're buying, you have to know what the motivation of the seller is and you've got to be very straightforward in your negotiations. If you're straightforward, it'll pay off, I believe. When you're selling, you have to be objective, thoughtful and rational. And you've got to leave something on the table for the next guy. When I leave a deal, I say, 'Although I think I've done well, I hope you get rich.' " 11. What's the current market like for acquisitions?
"It's a great market. There's lot of competition for deals but there's tons of capital out there. And it's even better in the U.S., by the way. There's a lot more entrepreneurial capital in the American market than there is in Canada. We're always looking for deals. You do a lot of looking, but you have to be very careful what you buy. There's lots of deals that you wouldn't want to do."
12. What's the best investment you've ever made?
"I would say the best investment was Maracay Homes (the Arizona home builder). We started it in '91 by acquiring a little company that was almost in receivership. It's a huge success, building 700 homes (annually) in the best market in the United States. We initially put about $3 million into it."
13. And the worst?
"In 1989, we bought a chain of record stores (A&A Record Stores). It was a combination of records (being phased out), immense competition with everybody fighting for the last dollar and poor management. Sometimes, you're lucky to go broke earlier than later and that was the case with this business (it went into receivership). That has turned into a very, very difficult industry. That was one of the times when I came to the conclusion that you'd better know who is running your business for you. We replaced management, but we didn't replace it with good management. The other lesson was that you need to identify when an industry is in a downturn and don't underestimate the length of a recession."
14. What are the factors that make or break real estate investments?
"In real estate, there's only one thing you need to do besides buying at reasonable prices, opposed to being really stupid and buying at the top all the time. I call it staying power. Real estate will always come back but you'd better have staying power. If you start levering it right up to the ying yang, you get in trouble. If you buy a property for $1 million and you have $800,000 worth of debt in it, you can lose your equity real quick."
15. There's a lot of talk about a real estate bubble forming, particularly in the U.S. Does that worry you?
"Yes, it does. Everything goes up and down and real estate is a roller coaster. So I wouldn't be rushing out to buy anything. I think Canada is probably in much better shape than the United States today (from a real estate perspective). I think our economy is much more sound. Frankly, although we're losing some of our manufacturing business as our dollar gets closer to the U.S. dollar, Canada's place in the world is sound. There's so much money flowing into Canada because of oil and gas."
16. Is Maracay Homes (one of Arizona's top home builders) for sale?
"I don't know. (Laughing) Everything's for sale."
17. What's your outlook for Ken Fowler Enterprises?
"About seven or eight years ago, I began to look at the company and whether I should start winding it down and get out of the investments or whether I would crank it up and make it bigger. I decided to crank it up. So I started hiring people and building the type of organization where it will continue in the future, even though there may not be any Fowler with an investment in it. I think this company could become a small merchant bank, if you want to call it that, that makes business investments and manages them well. So I'm gathering a nice group of young folks around me. I betcha I still work 50 hours a week, easily. And I have a driver so that I can get work done while I'm in the car. I go pretty steady. The beautiful part of doing what I do is that I don't have to retire. I'll just wind down. I'm sure I'll be working less, eventually. I'm sure (when it's time to slow down) it'll be health driven."
18. Would you take the company public?
"This type of business just doesn't 'get no respect' in the public marketplace, as Rodney Dangerfield would say. I'd say we're a mini, mini, mini, mini Onex (Corporation) and they don't get a lot of respect in terms of multiples (as an investment). But a public company gives you the opportunity to put money in and take money out. So would I take it public? At the appropriate time, I think it might happen."
19. How do you reflect on your career?
"Well, I thought about that a while back while I was sitting on a boat with (restaurateur) Bus Fuller, who has been a business partner since the late 1960s. We go fishing in the Queen Charlottes every year. I looked back and I said to Bus, 'My gosh, we've had fun.' When my sons were starting to grow up, I used to think that, unless they got into a big business with companies like General Motors or IBM, there was no future. Well, look at the opportunity today.
"Today, my sons (David, Doug and Peter are also on the board of directors of Ken Fowler Enterprises) are very independent and they're smarter than I am so I've got to watch what I do and say. They're getting very, very good too, but I've got to learn to respect that. I like working with them. We do have our challenges working together. We don't agree all the time."
20. God taps you on the shoulder and says you can change one thing in your life. What would it be?
"Oh, I would be a gentler person. I'm pretty aggressive with whatever I do. You can be too aggressive at times. As you get older, you develop a pattern in the way you operate and what you do. And I wish I had more patience. It's paid well for me to be the way I've been but, if you could wave a wand and change the way you are, that's what I'd change. I admire people who are very comfortable within themselves and people who have a softer, gentler style in the way they handle themselves and operate."
* Title: President/founder/sole owner, Ken Fowler Enterprises (KFE).
* Born/raised: St. Catharines, Ont.
* Education: Grade 10.
* Career: After starting his business career in photography and real estate, Fowler founded Ken Fowler Enterprises in 1972 and has been president of the private equity firm since then. He is also chairman of West 49, a Canadian retailer, and Arizona-based Maracay Homes; and a trustee of the SIR Royalty Income Fund, a public company that derives income from the Sir Corp. restaurant chain.
* Key Project: The Red Leaves resort on Lake Rosseau in Ontario.
* Honours: Fowler is a recipient of an honourary doctorate in law from Brock University (St. Catharines).
* Rides to work in: A Lincoln stretch limousine.
* Favourite escape: Fishing in the Queen Charlotte Islands.
* Most prized possession: A 1927 antique boat.
* Favourite movie: The Four Feathers (1939).
* Community pursuits: The Fowler family's charitable foundation supports several organizations and causes in St. Catharines and has been a major booster in funding for Brock University.
Ken Fowler Enterprises
* Brass: Ken Fowler, president; Jeff Long, chief financial officer.
* Profile: KFE is a private equity firm that invests in a broad spectrum of businesses, specializing in acquisitions, mentoring, strategies, financial planning and initial public offerings.
* Portfolio: KFE invests in various sectors, primarily real estate, restaurants and retail stores. Key holdings include Maracay Homes, The Rock golf course, SIR Corp. (restaurants), Earls Restaurants, Joey Tomato's Mediterranean Grill, West 49 stores and J. Michaels stores.
* Website: www.kfe.on.ca
* Office: 110 Hannover Drive, Suite 203B, St. Catharines, Ont., L2W 1A4.
* Phone/Fax: 905-688-9740/688-3060.
(Gyle Konotopetz can be reached at firstname.lastname@example.org)