Veteran private equity player Tony Melman, one of the founding partners of Onex Corp., is teaming up with Belinda Stronach to launch a firm that will offer business advice to chief executive officers and their management teams.
The new firm, Acasta Capital, was founded after Ms. Stronach and Mr. Melman met for the first time about eight months ago. As a part owner of Teneo Capital, a global advisory firm that offers guidance on everything from investment banking to government affairs to investor relations, Ms. Stronach wanted to know whether the former Onex and Canadian Imperial Bank of Commerce executive was interested in leading Teneo’s Canadian arm.
Instead of saying no, Mr. Melman came back with what he thought was a better offer: creating their own company with similar ambitions.
Launched Thursday, Acasta operates under the premise that it is hard for business leaders to get top-notch, objective input from banks and management consultants. “The CEO is in a lonely place,” Mr. Melman said, seated in the Library Bar at the Royal York Hotel in Toronto. “There’s a lack of what I’d call wise, all-encompassing advice.”
He wouldn’t go so far as to say that bankers are only looking out for their pockets when they pitch an M&A trade or an equity offering, or that consultants offer strategies that benefit their own bottom lines – but he hinted at it.
“I don’t want to knock these other professionals, because they do have a role,” Mr. Melman said, but he hopes Acasta’s structure will offer potential clients much more value.
Acasta plans to offer advice on everything from financial transactions to corporate strategy. To do that, it has lined up Mr. Melman, now a Canadian Pacific Railway director who was part of Bill Ackman’s proposed slate; Ms. Stronach, a former federal cabinet minister and former CEO of Magna International Inc.; Mark Entwistle, who has deep ties to government; Blaine Woodcock, a former senior manager in Deloitte’s corporate strategy practice; and Michael Liebrock, previously with the Boston Consulting Group in Toronto, New York and Sydney.
If all goes according to plan, this group will form a close relationship with the CEOs they offer advice to, becoming a sounding board on issues from how to price a new financing of debt or equity to navigating the political landscape on a proposed merger.
Mr. Melman’s message is that Acasta can get into the nitty gritty, while other advisers may take short cuts. As one example, the financial models employed by the biggest investment banks and consultants often break down because they rely on things like assumed growth rates that are too often pulled out of thin air. (Just check the footnotes on any slide deck if you ever need proof.)
Acasta’s services, of course, won’t be free, but instead of operating under the traditional advisory model, the firm will charge its clients a retainer, and then, depending on the advice, may also charge success-based fees for any strategies that ultimately pan out.
For the moment, Acasta is in discussions with a few potential clients. But even if it sees phenomenal growth, don’t expect its team to explode in size. “We want to stay small and have really, really top quality people,” Mr. Melman said.