Imperial Capital Wins 2023 PE Deal of the Year Award for Gateway Services

May 26th, 2023Private Equity

Gateway Services was founded in 1996 by Scott Hunter, who had a clear vision of what pet aftercare should be. He wanted to offer pet owners the opportunity to honor and remember their pets with the same types of funeral services they would expect for any other family member. Over the next two decades, Gateway grew and opened four locations in Ontario and employed a staff of 40 people, while Hunter became highly regarded by his industry peers.

In 2015, Hunter wanted to scale the business further and spoke to an advisor who introduced him to Imperial Capital, a middle-market private equity fund in Toronto. Imperial Capital’s Justin MacCormack and Gene Shkolnik met with Hunter and shared the firm’s track record of helping companies scale their business through a combination of capital, resources, experience, and expertise. The partnership between Imperial Capital and Gateway was negotiated and signed within a few weeks.

“We saw a tremendous opportunity for growth in the pet aftercare sector,” says MacCormack. “As more people become pet owners, they are increasingly humanizing their experience with their pets. They’re spending more money on service and care and have high expectations for service when it comes to how their pets’ remains are handled.”

Over the next seven years, MacCormack, Shkolnik, and colleague Gregg Reilly worked closely with Hunter to expand the business. Imperial Capital helped Gateway Services develop an M&A strategy to expand into the United States and across Canada, build out its management team, and make necessary investments in the business to support growth. Imperial Capital also facilitated several rounds of debt financing to make that growth possible.

“It has been a crazy ride,” says MacCormack. “Everyone rolled up their sleeves and leaned into helping to grow the business.” By 2022, Gateway had become the industry leader in North America, with 140 facilities across North America and more than 2,000 employees. “Partnering with Imperial Capital allowed Gateway to grow at an unprecedented rate,” says Hunter. “They shared my vision and were supportive every step of the way.”

In 2022, the Imperial Capital team raised a continuation fund for Gateway to provide some liquidity to shareholders while maintaining control of the business. “We were approached about selling the business many times over the years, but it was never the right time,” says MacCormack. “We wanted to continue our journey with Scott and his team, and we found the right solution to do so.”

“We raised over US$1 billion for the continuation fund, which allowed our investors to get a great return on their investment but also stay invested in Gateway, which many chose to do,” says MacCormack. “We’re very pleased with the transaction and Gateway’s ongoing prospects for building on its position in the pet aftercare sector.” Imperial Capital received the 2023 PE Deal of the Year Award for its work with Gateway Services.

“It’s funny, when all this started, my friends all said I wouldn’t last four months working with a private equity firm,” says Hunter. “Here we are more than seven years later and it turned out to be the best business decision I ever made. I’m excited to continue growing the business with the Imperial team.”