Private Equity at Work Private Equity at Work Private Equity Is a Partner in Driving the Growth of Canadian SMEs Home Investing in Canada Private Equity at Work Home How Does Private Equity Work? The active management that a private equity partnership brings to its portfolio companies helps them to become more successful businesses with stronger, more sustainable futures. How Does Private Equity Improve Canada’s Economy? On December 1, 2020, CVCA shared the results of a new study on the economic impact of private equity in Canada. The study was based on findings from PwC Canada and was commissioned by the CVCA. The study demonstrates that, in partnership with founders and management teams, PE funds have a significant positive impact on investee companies, particularly through employment growth, capital investment, and productivity gains. How Does Private Equity Positively Impact Small and Medium Sized Businesses? According to CVCA Intelligence, over 65% of PE transactions in Canada are under CAD $25M, highlighting the direct connection between Canadian PE investment and Small and Medium-Sized Enterprises (SMEs). SMEs are the backbone of the Canadian economy and according to Statistics Canada, supporting over 85% of all new jobs across the country. How Does Private Equity Impact the Middle Class? The majority of investors in private equity funds are pension plans and other institutional investors. The success of these investments provides income security and supports the retirement ambitions of Canada’s middle-class which include Canadian teachers, first responders, and autoworkers. Download the full study Key Findings 2020 PwC Canada PE Study Key Findings The PwC Canada study from 2020 demonstrated that private equity is a long-term partnership with the aim of making Canada’s small and medium-sized companies bigger, stronger and more profitable. Private equity partners with companies with a strong track record of revenue growth, but lower profitability and capital spend levels that provide headroom to increase. Following the private equity investment: Employment Growth: The investee companies experience employment that significantly exceeds those seen in benchmarks. Capital Investment: Investee companies tend to increase capital spending. Revenue Growth: PE-backed companies maintain strong levels of growth in revenue. Profitability: Non-PE-backed companies fared worse than PE-backed companies; pre and post-deal. Productivity: PE-backed companies encounter strong growth in productivity post-investment. Download the full study Employment Growth Employment growth at PE-backed companies was three times greater than non-PE backed equivalents. On a cumulative basis, the typical PE-backed company added almost one quarter (24%) to its headcount in the three years post-investment. Capital Investment Capital investment, as a share of revenue, rose by 75% in PE-backed companies post-deal, significantly faster than non-PE backed benchmarks. Revenue Revenue in PE backed companies maintained double digit growth post-investment (averaging 10.9% per annum), which is significantly higher than non-PE backed benchmark companies. Profitability Profitability in PE-backed companies was higher than equivalent-sized companies listed on the TSX Productivity Productivity in PE-backed companies experienced over twice the rate of productivity growth in the 3 years following the initial PE investment. Private Equity: A Significant Driver of Growth for Canadian SMEs The full report contains background, key findings along with data tables, case studies, and detailed methodology. Download the Full Report How Does Private Equity Impact Everyday Canadians? Learn how private equity invests in Canadian SMEs, creates jobs, supports retirement ambitions, and creates prosperity.