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 & 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.
What are the key findings?
The PwC Canada study demonstrates 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.
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.
How Does Private Equity Impact Everyday Canadians?
Learn how private equity invests in Canadian SMEs, creates jobs, supports retirement ambitions, and creates prosperity.
Private Equity At Work
Birch Hill’s investment helped Bluewave make a total of 16 acquisitions over three years that more than tripled the size of the…
With Westcap’s investment, the company continued on product development and future growth and increased its employee count.
By 2015, Finucan decided it was time to recapitalize the company he bootstrapped and grew organically from the ground up. He now…
Fulcrum didn’t just come with the funds, Castelli says, but the experience and strategic insight to help Weatherhaven cope with…
It was an interest and expertise in mechanical services that led Peter Harteveld to co-found CustomAir in his Metro Vancouver…
Photo Credit: Bell Media (Former Cieslok-owned Media Billboards, Yonge-Dundas Square, Toronto, Canada) A PE Partnership that took…
Photo from bestar.ca. It was nearly two years after selling his door manufacturing business to Masonite International Corp. that…
I joined the CVCA a year ago with limited knowledge of private capital. I had been exposed to venture investing, to some degree,…