PE Themes & Canadian Hardships 🍁
X user @carriednointerest had a good recap of Q3 2024 Private Equity deal activity:
What are the latest hot themes in private equity? Where's the money going?
Here are the themes from the last quarter, some expected and some surprising:
Expected trends:
1) Landscaping: 5-10 platform deals.
2) HVAC: numerous deals, though some appear misclassified as platforms.
3) Environmental Consulting: an emerging theme; check it out.
4) Petcare: vet services remain in demand with substantial activity.
5) Medspas: a lot happening here, particularly with platforms focused on aesthetics.
6) Roofing: at least 10 platform deals indicate rising interest.
7) Pools: several platform deals for pool maintenance.
Unexpected trends:
1) Auto Repair: significant activity noted.
2) Legal Services: multiple platforms are emerging, particularly in court reporting and legal notifications.
3) Retirement Services: a surge of wealth management and retirement planning deals, especially relevant for boomers.
4) Insurance Brokerage: contrary to some beliefs that this market is saturated, the data shows a strong cluster here.
5) Dental Implant Manufacturing: both manufacturing and services are gaining traction.
6) Fire Protection: still active, contrary to expectations.
7) Pharma Services: robust activity in this sector.
8) Compliance Services: increasing demand across various industries.
Continuation fund activity continues to grow as an exit route. Likely means others may not be willing to pay the price GPs are hoping for, for some assets.
Private Equity continues to trade at a premium to the S&P 600.
Private Equity is increasingly finding value in Europe.
The Globe & Mail published their charts of 2025, and unfortunately, the outlook is rather bleak. Perhaps the silver lining is that it can only improve from here.
It has been a dark era under the Trudeau government for Canadian growth. Large deficits and limited growth.
Canadian debt problems will continue to hinder growth until addressed.
Household purchasing power has declined almost 10% for the bottom 20% of the population in Canada since the beginning of 2021.
Bringing non-permanent residents to 7% of the Canadian population contributed to changing views on Canadian immigration.
Canadian residents started leaving for the US at a faster rate.
Technology and Communications have been driving GDP growth. That is why everyone chases this golden goose.
Yet Canadian entrepreneurship has declined over the past 25 years.
Ontario real GDP per capita has hardly moved in 25 years.
The Bank of Canada predicts that a 25% tariff would lead to a recession worse than that of 2008.
Ontario would be hit the hardest by tariffs.
The major Canadian banks have revised their forecasts for the BoC's overnight rate and the 5-year bond, which influences fixed-rate mortgages.
