Canada’s small public companies struggled to secure financing in 2011, financial executives say

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(Toronto, 21 February 2012) Despite Canada’s relatively stable economic landscape, small public companies here are still struggling to obtain access to credit — a critical cornerstone in their ability to succeed, according to a study by the Canadian Financial Executives Research Foundation (CFERF) and sponsored by EY.

Credit availability barometer: 2011, published by the research arm of Financial Executives International (FEI) Canada, shows that credit continues to be much easier to obtain for companies already flush with cash. That could make this a challenging year ahead for smaller public companies hoping to grow.

“Access to financing is the key to smaller businesses’ ability to foster innovation, attract the best and brightest talent, create jobs and — in some cases — to even survive,” says Michael Conway, Chief Executive and National President of FEI Canada. “Companies caught in the wake of today’s tightened credit market must look further afield for financing opportunities that enable them to grow their company and push our economy forward.”

The report found a majority of these businesses are turning to organic growth — including growing their customer base and increasing their sales — rather than focusing on mergers and acquisitions as a source of growth.

“Building a strategic plan that incorporates new sources of funding and is dedicated to improving company performance is crucial for smaller companies looking to capitalize on growth opportunities in this tough environment,” says Brian Allard, Partner at EY.
Cost-cutting and identifying operational efficiencies, as well as cash flow and liquidity, are already focus areas for 76% of companies this year.
With investors’ decisions often weighing on profitability, revenue, cash flow and credit history, companies across the country were also unanimous that those with access to credit should seize the opportunity and line up as much financing as possible before market turmoil beyond our borders drives Canadian lenders to scale back their financing activities.

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About the Canadian Financial Executives Research Foundation
CFERF is the non-profit research institute of FEI Canada. The foundation’s mandate is to advance the profession and practices of financial management through research. CFERF undertakes objective research projects relevant to the needs of Canada’s senior financial executives in working toward the advancement of corporate efficiency in Canada.

About Financial Executives International Canada
FEI Canada is the all-industry professional membership association for senior financial executives. With 11 chapters across Canada and more than 2,000 members, it provides professional development, thought leadership and advocacy services to its members. The association membership, which consists of chief financial officers, audit committee directors and senior executives in the finance, controller, treasury and taxation functions, represents a significant number of Canada’s leading and most influential corporations.

For more information, please visit feicanada.org.

About EY

EY is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.