Views From the Market

Today’s guests, Dan Chetrit and Liroy Haddad, are co-founders of Snowdon Partners. Snowdon invests in lower midmarket businesses, both directly and as a search funder. Liroy and Dan are flexible about the level of ownership Snowdon assumes, but their philosophy is to be active, long-term partners to their portfolio companies. While its investments span Canada and the U.S., Montréal-based Snowdon is particularly noted for its experience and connections in Québec’s lower midmarket.

Mario’s guest is Kalle Kilpi, Founder and CEO of DealMap.Ai, a Boston-based business that tailors large language model (LLM) M&A solutions for active acquirors. LLMs like Chat GPT have potential applications to nearly every aspect of a transaction, from drafting, due diligence and routine correspondence to target discovery and strategic analysis. Please join Mario and Kalle for a fascinating and informative look at what could be the M&A world of tomorrow.

Mario’s guest, Ed Bryant, is the driving force behind Sampford Advisors Inc., a tech-sector sell-side advisor. He and Mario discuss the post-pandemic market, noting that buyers will still pay a good price for quality businesses but are less interested in those that are cash-flow negative. In contrast with 2020-21, growth is no longer enough: the “Rule of 40” is being more strictly applied. Among the other topics of discussion is AI, which in Ed’s view is not yet a major M&A driver but may become so within a few years.

Today’s guest is Sebastien Koechli of Helia Capital, a family office that provides “patient capital” to businesses transitioning out of their entrepreneurial phase. As a purpose-driven investor, Helia looks beyond short-term profit, making minority or majority investments (as appropriate) in businesses with long-term potential and aligned social values. While current market conditions are challenging, Sebastien reports that internally-funded Helia is continuing to find good investment opportunities.

In this podcast, Mario speaks with Matthew Hooper, CEO of Hometurf Lawn Care, about his journey from searcher to owner to seller and now CEO of a mid-sized regional home services business. Matthew talks about the search process, about entering a sector that was new to him (in which a strong relationship with the seller was critical) and about his subsequent decision to sell the business and continue as CEO as it becomes part of a larger home services group.

Mario’s guest today is Grant Wallace of Vancouver-based Relay Transition Partners, an advisory firm serving midmarket businesses in western Canada. Grant shares his insights into the British Columbia and Alberta markets, in which deals tend on average to be slightly smaller than is typical in Ontario and Quebec. Investors that are comfortable in the $5-30 million market niche will find many outstanding prospects in tech, energy, manufacturing and distribution, among other sectors. PE funds tend to focus on the upper end of this range, while the lower end is attracting intense interest from search funds. Deal flow has slowed slightly but remains healthy heading into Q3 of 2023.

Mario’s guests, Brent Timmerman and Jody Law, are co-CEOs of Pacific West Mechanical, a British Columbia company that provides HVAC and plumbing maintenance services to high-rise buildings, including condominium towers. Through their investment business, Gazelle Capital, Jody and Brent acquired Pacific West after a year-long partnered search and are now in their second year of operating the business. They discuss the attractive features of this sector – which include significant recession resistance – and their thoughts about generating further consolidation via M&A. In their view, the recent surge in interest in HVAC and plumbing businesses is affecting seller expectations but, at the same time, is not showing any signs of slowing down.

Joining Mario today is Brian Davey, CEO of NADF (Nishnawbe Aski Development Fund), a lender to Indigenous entrepreneurs across Northern Ontario. With over $50 million successfully disbursed to date, NADF is planning to take the next step: creating an investment fund that will leverage its deep understanding of Indigenous communities and their needs. In Brian’s view, infrastructure – particularly roads, transmission lines and housing – is where many of the region’s best opportunities lie.

Mario’s guest on this edition of the podcast, Brandon Lalonde of FrontWell Capital Partners, discusses FrontWell’s emergence as a key facilitator of private debt. Equally able to participate alone or in a syndicate, FrontWell lends against assets or cash flow in transition situations where a fundamentally strong business is in a capital-intensive growth phase or re-positioning after an adverse event. Current economic uncertainty is bringing this form of lending, which has been uncommon in Canada, to the fore, as interest rate pressure causes Canada’s bank lenders to tighten their lending criteria.

Today’s podcast guest is Jordan Fish of Blair Franklin, an M&A advisory practice with 20 years of Canadian midmarket experience. He and Mario discuss the state of the market at the midway mark of 2023, as buyers focus on higher quality assets and take a more cautious approach that is leading to extended due diligence processes. Sectors discussed include financial services, which continues to see significant deal flow, and technology, where disciplined companies with good cash flow are attracting the most attention.