Trump Tariffs, One Year Into Employee Ownership: Annex’s Jamieson Talk To AMO

Annex Business Media recently completed a year under employee ownership. It’s proved to be a pretty motivator of people, albeit with risk. The Canadian company’s also facing—like the rest of its country—fallout from the incipient yet already whirlwind administration of U.S. President Donald Trump.

The employees bought out the previous owners by taking on debt a year ago.

Annex Chief Executive Officer Scott Jamieson broke things down for AMO in a chat on March 26. Edited for clarity.

CS: One year into employee ownership, you’ve paid a dividend, which is great. Are there any other changes or is everything exactly the same? Do you see any evolution?

SJ: There are certain criteria that if you have it before you become employee owned, the transition is very easy. If you already have some sort of profit sharing, which we had, if you already have a high degree of ownership among employees, which we had, if you already have a lot of financial transparency sharing of actual numbers, which we had, the jump is not going to dramatically change your business. [It’s] almost just affirming what you’ve already got.

But now they get dividends as well as profit sharing. Of course, we have a lot of debt, because this is debt financed. We did it through a bank, and so we bought out half of the owner’s shares and are paying that bank loan off, and then once it’s paid off, we take another bank loan and buy them out completely. While you’re doing that, of course, there are limits to dividends that the bank will allow you to take.

As you pay off more of that debt, you have more flexibility, and you can pay larger dividends.

We do have more financial transparency. We have a quarterly meeting where [employees] see the whole P&L, which they used to only see for their individual brands. They now see [it] for the entire company. They see how a certain amount of revenue, in detail, becomes your EBITDA, which becomes your taxable income, then becomes what you can actually distribute as dividends.

Every company needs a certain number of B and D-plus players and that’s where you get the biggest potential increase engagement. Now, it’s ‘This money goes, in the long run, nowhere but to us.’ So that’s where you get the engagement.

I can see it on LinkedIn, the way they post about things. There’s people referring to themselves as owner operators. So there’s definitely more pride.

Every positive has a flip side. So we’re more transparent. People ask more questions. So if you’re comfortable with that, you have to be comfortable with sharing information incorrectly and then going back and correcting it, because the way we share information, it’s a live town hall with a Q&A, and I’m famous for saying things that I shouldn’t say.

For this past year, we were not looking at acquisitions, but we’re back full time in acquisition mode, where we’ve made an offer on one and we’re deep into a second one. We have some extra financing from our bank. They would like us to grow so there is some extra financing already there, but both of these we will probably be able to do out of cash flow or line of credit.

CS: How long will it take to pay off the initial debt?

SJ: We’re kind of flattish with last year, a little bit down—I’ll take that, but that does mean it’s probably going to be closer to seven years [to pay off]. If we do these acquisitions, they add cash flow quickly enough that we could get it back to five. It’s going to depend on how the business is going, how much extra cash we have hanging around.

CS: What’s the impact of the new Trump administration and tariffs?

SJ: What we find for our readers is news that’s relevant to their operations, and so that’s where we’re focusing. We’ve had some brand name economists from people like the Bank of Montreal and our manufacturing associations talking about tariffs and what is likely to come out of that, and what are some of the things we can do.

Canadian operations, us included, are going to be looking for new supply chains, and also new export opportunities. We can bring in experts and do the research ourselves to educate people on what’s available. That’s both a content obligation we have to our readership, but it’s also a business opportunity for us, because you can get sponsorships around this. You can charge for attendance. The webinar we did on tariffs in manufacturing was a paid webinar, plus it had sponsorship. We got $10,000 in sponsorship, and we collected thousands of dollars from people paying to attend the webinar.

I don’t think most American business vendors understand how far it’s gone, and that is going to be interesting. We can help them with that. There’s something that must be navigated.

We’re having some of our U.S. suppliers who we have very good relationships with, say, [should we go up to Canada?]’ Our answer is, yeah, absolutely because the only reason you still have the business is either there’s no other option. Or relationships. The other options eventually will be found somewhere. But there’s a big old world out there, so it’s relationships. You better hold on to those relationships and come down here. People are going to ask you some tough questions. You’re going to have to navigate the 25%. How much [of the tariffs] do you eat? How much do we eat? Those are conversations we didn’t have to have last week, the week before, but they have to do it.

There’s a lot of complexity, and where there’s complexity, there’s opportunities for B2B media to simplify it.

CS: Are you able to forecast the rest of the year, given the upheaval?

SJ: We will make budget, but we won’t make budget doing what we thought we were going to do this year. There’s going to be a lot of these new ideas and new clients that are trying to get into our market, just like the year after Covid, 2020—we’d had a decent year, but it wasn’t on events like we normally would. It was on high margin virtual events and webinars and ways of keeping our communities in touch with each other in a locked down world.

(Annex recently added Hum, a customer data platform that allows them to have consistent taxonomy across its 65-plus websites, and discover what readers are interested in, both within a brand and between brands.)

We’re going to use that to create webinars, CMD news, virtual events, events around topics where people have a lot of interest. Obviously, right now, diversification of exports is a big one. So too is succession planning among Canadian small to medium business owners, because demographics, right? The same reason [Annex’s] owners just sold last year. They have no clue how to do it. It’s very complicated. So we’re holding an event called Succession 2025 near the Toronto Airport. We’ve already got full sponsorship.

We’re looking for things like that that take advantage of trends that are there, whether or not we have tariffs.

CS: You’re tapping into needs given all the changes, but you’re also diversifying outside of that. What other ideas akin to the succession event do you have?

SJ: Hum has been running up on our brand websites now for just over two months. The view across all the websites is a relatively recent phenomenon, so we’re just starting to collect that data now to see what are some of the other topics, like succession, that are out there.

There are also acquisition opportunities that will come from this, just like in succession, there are people in the magazine sector in Canada who probably waited too long to sell. I’m talking about one or two magazine companies, not large companies, adjacent to some of our markets.