Canadian family businesses are uniquely positioned to capitalize on a market that’s now as active as it’s ever been. Capital is plentiful, interest rates are low, valuations are high. These intersecting factors are generating new ways for owners to reframe their path forward. Whether you’re looking to grow, divest or uncover a compelling route to succession, explore your options now or run the risk of missing out.
What does your family business stand to gain?
Make no mistake: the pandemic continues to foster uncertainty, with varying impacts from one sector to the next. The market, though, is having a moment. Last winter, nearly 80% of Canadian executives said their company had failed to complete, or cancelled, a planned transaction during the previous year. Fast forward to today, and those decision-makers appear ready to put 18 months of pent-up capital to work. Compound that drive with a ready availability of cash and historically low interest rates, and your family business could be the perfect opportunity for another firm to grow through acquisition.
In parallel, the pandemic is also driving the need for companies of all shapes and sizes to innovate quickly and transform digitally. As larger organizations look to buy — not build — those capabilities, your family business could provide in-house agility or a key partnership for any corporation hungry to capitalize on what you already do very well.
All of this is happening as investors compete by seeking out alternative investments and asset classes. This includes family offices, which we see professionalizing and showing an increased interest in creating dedicated private equity (PE) arms from within. Aligning what your family business hopes to achieve next with this well-capitalized pursuit of synergies, acquisitions and partnerships could be a fruitful proposition.
The 2021 EY and University of St. Gallen Family Business Index continues to show that family businesses are vital to the health of the global economy. That includes the 14 Canadian organizations listed among the world’s largest family-owned businesses. What matters now is how these organizations will make the most of this environment.