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They may not always garner the same level of attention as publicly listed businesses, but Canada’s 1.2 million private companies comprise by far the largest single segment of the Canadian economy.

“We’ve always believed in the power of private companies, and we’ve built many great relationships over the years,” says Tom Kornya, Assurance Managing Partner. “We’re continually building up our private company services across Canada, investing in the people, knowledge and services to help these businesses address their unique challenges and seize opportunities.”

Our Toronto Private Mid-Market practice is one of our strengths in the private company space. Partners David Fabian and David Steinberg, co-leaders of the team, have devoted their careers to a laser focus on helping private companies achieve their potential.

“There are more than a million private companies in the mid-market space, compared with only about 6,000 public companies,” says Steinberg. “They range in size from $1 million to $1 billion, and from family businesses that have been passed from one generation to the next, to partnerships and private equityowned companies. Taken together, they’re the country’s biggest employers.

“Some of these companies will eventually go public, but our focus is private companies that are staying private.”

That obviously presents a great deal of potential to tap, and the competition to serve this market is intense. Our practice, however, is unique.

“The big firms and the smaller boutiques are all in this space,” notes Fabian. “But we bring the best of both worlds to these companies — the intimate, boutique-style relationships they’re looking for, plus the integrated service model and resources of the national and global EY network. And we offer the private company audit methodology that addresses these companies’ specific requirements, something other firms don’t.”

Steinberg agrees. “Small and mid-sized business owners often see a big, global service provider as being interested only in the Fortune 500, and that they’re remote and slow to respond to the day-to-day needs of a private business. We’re anything but — we’re in close contact with our clients at all times, and we’re available to them literally 24/7, 365 days a year.”

The team has 17 partners, and at least two partners are assigned to each engagement so that a client always has someone available. “We want to reassure our clients that we have them covered,” says Steinberg, “and we’re in touch daily, even if it’s just to check in and say hi.” So what are some of the issues private company owners should be thinking about in 2013?

“The economy is recovering from the downturn, but it’s been a slow climb and the situation is still pretty delicate,” observes Fabian. “That being said, there’s opportunity for companies to grow — it’s all about looking at the right things and prioritizing.”

Business owners need to look at their internal landscape, say the partners. “Can you make internal changes to become more efficient, such as using technology more effectively to deal with head count?” says Fabian. “A lot of that was done in 2009 when the financial crisis first hit, and while there are still opportunities for efficiencies, they’re not as easy as they were three years ago.”

Companies also need to consider whether they have the infrastructure and customer base to be sustainable in a no-growth economy.

“If you have the capital structure and equity, you can explore opportunities to grow via acquisition,” says Steinberg, “and potentially become a dominant player. Alternatively, if you go through cost-cutting and efficiency and you’re still not competitive, and you don’t have capital to grow and eliminate your competitors, you may have to look at getting out of the industry.”

Fabian echoes this sentiment. “When growth isn’t achievable and you’ve exhausted every means of cost reduction and process improvement, you may find the best option is to simply sell the business.”

Companies can’t sit still in today’s uncertain economy. “Nothing is worse than being static in a growing industry,” says Steinberg. “If you’re finding that you’re not getting to where you want to be, contact an advisor who knows your market and can help. There could be opportunities you hadn’t considered.”

“Between us, we have over 40 years of experience serving private mid-market companies,” says Fabian. “We’ve seen a lot and been through the ups and downs of the economy. We’re always glad to explore ways to help business owners achieve their visions.”

To learn more, visit us at ey.com/ca/focusonprivatebusiness.

Steinberg and Fabian offer the following seven key ways private companies can stay competitive in a tough economy:

  1. Maximize your workforce. Speak with staff, management, customers and stakeholders to identify opportunities to boost productivity.
  2. Pursue vendor diversity. Assess your relationships and see if you’re casting a wide enough net to get the most value from your suppliers.
  3. Streamline your legal entities. Make sure each legal entity holds the appropriate assets, your legal exposure is minimized and your costs are being managed.
  4. Assess your capital structure. Check that your debt/equity ratios are consistent with your risk tolerance.
  5. Pursue unique growth opportunities. Think about whether your company needs to focus more on organic growth or acquisition. Look beyond borders — there could be low-hanging fruit outside of Canada.
  6. Look at your product lines. Ensure that gross margins realized are consistent with expectations.
  7. Look to the future. You’ll have to plan for the next generation of leadership sooner rather than later. Consider whether the business is appropriately structured for succession, and whether your estateplanning needs are appropriately structured.