In Review: FOCUS ON: Financing

– Canada’s current financing and investment landscape –

In partnership with Export Development Canada (EDC), OG100 recently hosted an interactive session with a panel of financial industry experts from EDC, BDC, Fulcrum Capital Partners and RBC who spoke to the OG100 membership about the current financing and investment landscape in Canada. Members appreciated a timely and informative discussion on how COVID-19 has impacted access to capital and how criteria for investment has evolved.

Where we are today is very different compared to 90, and even 30, days ago. The economic landscape continues to evolve. However, most businesses have weathered the deep economic impact of 2020, we have seen a strong rebound in Q3, and Q4 looks to show strong recovery for most companies. Private equity is returning to an offensive position, predicting that 2021 will be a banner year with M&A back in a big way. Compared to 2007/08, there is a lot of available capital and therefore more options, opportunities, and competition.

Businesses are restructuring not just their balance sheet, but also how they run their business. Good management is more important now than ever before. It is becoming clear what industries will weather this storm as is, and which will have to adjust their business plans significantly. However, all businesses need to be thinking about various scenarios. We can’t expect to see clean financials until 2022 or 2023, so the next two years will be too unpredictable to bank on one probable outcome. Scenario planning and risk management will be the solid base for any business plan as well as investor assessment. Leaders need to plan for the various ways they will adjust in order to achieve long term success.

Financing partners are looking for solid companies with competitive platforms, with a strong management team. Internal alignment – between shareholder groups, management, and boards – has proven to be an increasingly important indicator in investment success. Management teams with a long lens and ability to see industry trends are favourable for private equity investment. Before embarking on an investment journey, be sure to do your due diligence to find a financing partner with key guiding principles that align with yours. Most importantly, remember that perfect can be the enemy of good. Deals and projects don’t need to be finalized before you begin to engage a potential financing partner, who should ultimately be able to provide valuable support to help you finalize your plan and achieve your goals.

Many thanks to our panelists:
Ken Kember, CFO, EDC
Nathan Gibb, Managing Partner, Investments, EDC
Robert Duffy, VP, Growth and Transition Capital, BDC
Paul Eldridge, Partner, Fulcrum Capital Partners
Michael Ferencich, SVP, Business Credit, RBC