It was May of 1979 and Montreal’s business establishment was still reeling from the election of the Parti Québécois 2½ years earlier. The referendum on Quebec independence was looming and well known companies such as Sun Life Assurance Co. were picking up stakes and moving down Highway 401 to Toronto.
Angus MacNaughton, vice-chairman of Genstar Ltd., a growing conglomerate and stock-market darling, also decided to leave town. The company’s annual meeting was told that Montreal was no longer a good place for a headquarters because high income taxes, political uncertainty and language laws made it hard to attract managerial talent.
But instead of opting for Toronto, Genstar surprised everyone by announcing that the company had opted to move its executive offices to San Francisco. Mr. MacNaughton explained the company’s growing collection of subsidiaries – in cement, building materials, chemicals, real estate development and maritime transportation – was focused on Western Canada and the U.S. Sunbelt, and Genstar wanted to be nearer the action.
For Mr. MacNaughton, who died on May 19 in Danville, Calif., of melanoma at the age of 89, it was the kind of daring move that characterized a career of buying and selling companies as he climbed to the top of the Canadian business establishment. Yet soon after accomplishing his greatest coup, the 1985 purchase of Canada Trust, Genstar was broken up and he faded from the limelight as a wealthy private investor in California.
“He loved deal-making,” his son, Andrew, said. “It was his raison d’être. He was quick with numbers. He could negotiate very quickly because he could do all the math in his head.”
In 1985, he was called one of Canada’s 10 best CEOs ever, alongside the likes of Seagram Co.’s Samuel Bronfman. Writing in The Globe and Mail, financial analyst Jim Doak called him “the model financial engineer” who skilfully built Genstar and sold it at the perfect moment.
“He pushed his executives to meet their budgeted returns, so much so that they suggested he had no personality, just internal rates of return,” Mr. Doak wrote.
Angus MacNaughton was born in Montreal on July 15, 1931, the eldest son of Athole Austin MacNaughton, a Montreal restaurant owner who later ran a hotel in the Laurentians, and his wife, Emily Kidder MacNaughton (née McLean). Angus attended Roslyn Elementary School in Westmount, Lakefield College School in Lakefield, Ont., and Lower Canada College in Montreal before taking courses at McGill University and qualifying as a chartered accountant.
He began working at McDonald Currie & Co., a Montreal accounting firm, and in 1955 was hired by Sogémines Ltd., a firm controlled by Société Générale de Belgique to invest in Canadian resources as it exited the Congo, buying up assets such as Montreal’s Miron Cement limestone quarry. Mr. MacNaughton moved up the ranks and oversaw the company’s expansion after it morphed into Genstar.
Richard Paterson followed a similar route, studying accounting at Montreal’s Sir George Williams University (now Concordia University) before joining Sogémines in 1967, working with Mr. MacNaughton for the rest of his career, ending up as senior vice-president and chief financial officer.
As a boss, Mr. MacNaughton kept employees on their toes. “You had to know what you were doing because he could go through numbers so quickly,” Mr. Paterson recalled. And unlike other financiers who find it easy to buy assets but hard to sell, Mr. MacNaughton had no such problems. “There was no emotion involved. A decision was made on the basis of facts and you moved on,” Mr. Paterson said.
Genstar’s leadership was unusual. Mr. MacNaughton teamed up with Winnipeg native Ross Turner and the duo became inseparable, with Mr. MacNaughton responsible for the financial side of things and Mr. Turner for operations. Starting in 1976, the two men alternated as Genstar’s president and CEO on an annual basis. They came to be called the Bobbsey Twins.
And although its largest shareholder was Belgian, Genstar managed to convince officials in Ottawa that the company could be considered Canadian-controlled and thereby exempt from onerous foreign investment review oversight then in force. It was a significant coup.
As well as expanding its cement and building materials operations, Genstar became a major real estate developer, buying up tracts of land in Alberta, British Columbia and the U.S. Sunbelt. A notable deal involved the purchase of a 5,000-acre tract of valuable land near San Diego from the Teamsters union’s pension fund, which found itself forced to sell after pressure from U.S. regulators. It proved very profitable.
Even after moving its executive offices to San Francisco, Genstar kept a high profile in Canada as its executives flew back and forth in the corporate Gulfstream. In 1984, The Globe surveyed salaries of top executives at Canadian companies publicly listed in the United States (Canadian regulators didn’t demand that kind of disclosure), and disclosed that Mr. MacNaughton and Mr. Turner were the second-highest earners, each drawing an annual salary of US$856,126. That’s more than the CEOs of Bell Canada, Imperial Oil, Alcan or Canadian Pacific took home.
In 1981, Genstar bought Canada Permanent Mortgage Corp., and four years later, scooped up Canada Trustco Mortgage Co. (operating as Canada Trust), at the time the largest independently owned trust company in the country.
The takeover was not without drama after Canada Trust CEO Mervyn Lahn made it clear he wasn’t thrilled about losing the company’s independence. Genstar kept him in his job, but there was tension with the more flamboyant Mr. MacNaughton and Mr. Turner. “It has not been a convivial relationship,” Mr. Lahn told Maclean’s.
But within a year of the Canada Trust takeover, it was Genstar itself that was fighting for its independence after Imasco Ltd., the Montreal-based tobacco giant, swooped in with a bid to take over Genstar itself. The takeover succeeded and Genstar was broken up, with Imasco keeping Canada Trust and selling off the remaining assets. (Toronto-Dominion Bank bought Canada Trust in 2000.)
An effort by Mr. MacNaughton and Mr. Turner to keep Genstar’s non-financial assets was rebuffed, but they did get to retain the Genstar name, using it to set up a private equity firm called Genstar Capital with Mr. Paterson and John West, another senior Genstar official. Mr. MacNaughton remained involved through several funds, but by the mid-1990s he was largely retired.
Although crafting deals and making money were his passions, Mr. MacNaughton loved the good things of life, from collecting watches to building and owning boats, including a cigarette racing boat and a 42-foot cruiser.
Cars were always a special hobby, starting when he was a young accountant in Montreal. On his way to work, he would pass by Cumming Perrault, a local car dealership, and covetously eye a powder blue 1956 Lincoln Continental convertible with its signature “suicide doors,” his son recalls.
The $2,000 price tag was a bit too rich so the young Mr. MacNaughton passed up on the purchase. One day, the Lincoln was gone. He was devastated. But two days later, it reappeared in the showroom. He asked the salesman what had happened. Turns out the car had been bought with a $500 down payment, used for a bank robbery, then abandoned.
The dealer had taken the car back and Mr. MacNaughton arranged to buy it for the balance of $1,500. Thus started a love affair with a series of Lincolns, with the last one biting the dust in 1996, Andrew said. Over the years, he also owned a 1933 Packard, a Rolls Royce, several Mercedes and a few of his favourite brand, the Bentley.
Mr. MacNaughton also flew his own plane. Mr. Paterson recalls how his boss would think nothing of flying down from San Francisco to his home in Lake Tahoe on Friday for a weekend of skiing and returning on Sunday evening. He also kept a home in the Swiss ski resort of Klosters.
But it was heli-skiing he loved above all, usually using Whistler, B.C., as a base for an annual pre-Christmas vacation with his son. It’s a tradition he kept up until he was 85. In summer, skiing was replaced by golf.
Mr. MacNaughton also enjoyed world travel. In style. His daughter, Gillian, recalls the round-the-world trip in 2001 that included 10 family members. “In a month, we went to Bora Bora, Cairns in Australia, Vietnam, the Maldives, South Africa, Rio de Janeiro and the Galapagos. We spent three days in each place.” All travelling by private jet.
Beyond Genstar, Mr. MacNaughton served on the boards of several large corporations, including Sun Life, Barrick Gold, Canadian Pacific, Fairmont Hotels, Stelco Inc., Royal Trustco, Wolverine Tube and Varian Semiconductors.
Among his volunteer ventures, Mr. MacNaughton served as a trustee of the Lakefield College School Foundation, was past chairman of the San Francisco Bay Area Council of the Boy Scouts of America, was a former member of the Hudson Institute and a senior member of the Conference Board of New York.
Mr. MacNaughton leaves his wife, Cathy, whom he married in 1997. Three previous marriages ended in divorce. He also leaves his daughter, Gillian, an associate professor of human rights at the University of Massachusetts; son, Andrew, a onetime triathlete and coach; as well as his brother, Bruce MacNaughton.