Below is an excerpt from BDO Canada’s 2025 Private Equity in Canada Report, offering key insights into the latest trends and developments in the sector.
Private equity (PE) continues to solidify its position as a cornerstone of Canada’s economy, driving business growth and expansion across the country. In recent years, PE activity has consistently outpaced public markets, showcasing its resilience and adaptability amid market fluctuations.
Looking into 2025, we anticipate a continued trend of increased deal activity as PE firms focus on returning capital to investors as well as strategically deploying capital into add-ons and new platform acquisitions.
While current geopolitical events may pose some challenges, PE is no stranger to navigating uncertainty. Coupled with macroeconomic factors like aging baby boomers, the great wealth transfer (with an estimated $1 trillion changing hands between 2023 and 2026, according to CPA Canada), and shifting market dynamics, PE will remain a key player in shaping Canada’s economic future and solving the country’s productivity problem.
We surveyed 450-fund managers and operating partners at PE firms and 200 CFOs at portfolio companies (portcos) for insights into their top priorities and challenges. Though there were some differences in short-term priorities, both care about long-term success and increased returns to their stakeholders.
This exclusive survey provides a deep dive into the Canadian PE landscape, highlighting key themes shaping the industry in 2025. In addition, we have woven in best practices throughout this report, offering actionable insights to help PE firms and portcos navigate the year ahead with confidence and resilience.
Top headwinds, challenges, and growth strategies
Our survey highlights overlapping challenges faced by both PE firms and portco CFOs in today’s complex environment. Ongoing uncertainties — along with a heightened risk environment fueled by ongoing geopolitical uncertainty — continue to compel PE firms and portcos to carefully consider the impact on their investment decisions regarding timing, location, and strategy.
Feedback from PE firms and portco CFOs has highlighted several key points where alignment is required on growth strategies. A collaborative approach towards achieving overall goals is expected to facilitate successful transactions and, ultimately, the long-term success for both portcos and PE firms.
Capital deployment
While deal activity grew moderately in 2024, the outlook for 2025 points to a sustained increase, driven by large amounts of deployable capital, as well as the need to create liquidity for investors via exits. With increased competition among PE firms to deploy capital, they are increasingly exploring alternative strategies. These include expanding investments in existing portcos, targeting distressed businesses in need of financial re-engineering, and turning to public markets where there are opportunities with undervalued companies.
Post‑M&A operational challenges
While transactions often involve organizational changes, achieving the synergies outlined in the deal thesis (along with growth and cost savings) requires precise resource allocation and execution. Also, PE ownership typically introduces stricter reporting requirements, enhanced governance, and more structured decision-making processes, which can drive long-term value creation. However, for portco CFOs, these changes present challenges, including meeting aggressive revenue growth targets and adapting to new reporting standards — often a significant shift for private companies previously accustomed to minimal or less formal governance.
Value creation
Economic uncertainty, intensified competition for limited assets, and persistent — though narrowing — valuation gaps have heightened the critical role of effective value creation strategies during the hold period. The traditional financial arbitrage strategy of buying low, using heavy leverage, and quickly flipping assets to generate returns is no longer viable. With more and more PE firms entering at a premium, they must focus on operational and practical value creation using structured and targeted strategies to ultimately improve returns for their limited partners (LPs). While the strategies and levers utilized by PE firms and portco CFOs may vary, they are committed to getting the same result and above all else, execution is key. Responses from PE firms and portco CFOs show alignment in the areas of managing cash flow and adopting more sophisticated pricing strategies. In addition, opportunities can be unlocked by amplifying pre-deal due diligence to identify additional value opportunities.
The CFO’s changing role
The role of the CFO has transformed dramatically, expanding beyond traditional finance management and reporting to encompass a strategic focus on driving operational, technological, and financial value. With talent acquisition and retention now critical to dealmaking as well as the success of value creation strategies, today’s CFOs must possess a diverse skill set that includes leadership, investment acumen, change management, and entrepreneurial thinking. As their responsibilities increasingly centre on strategy and profitability, CFOs are evolving into Chief Value Officers (CVOs).
Technology adoption
The potential of artificial intelligence (AI) is gaining greater recognition as its adoption expands across diverse use cases. When utilized effectively, AI has the capacity to significantly boost productivity and efficiency, enabling organizations to prioritize value-driving activities. This shift is particularly critical as the ongoing talent shortage prompts both PE firms and portcos to reconsider how tasks are allocated. By automating repetitive or low-value processes, AI allows teams to focus on more meaningful, engaging, and value-added work. As AI tools continue to evolve, their applications are rapidly broadening, unlocking new opportunities for innovation and growth.
The road ahead
“While external factors such as economic conditions and geopolitical dynamics will inevitably shape investment decisions, long-term success will depend on maintaining a disciplined approach to value creation, operational excellence, and staying true to the fundamentals of what makes a business strong — solving a real market need.”
—Sunil Sharma, National Leader, Private Equity
To discover more insights and actionable strategies, read the full report ‘2025 private equity in Canada report.’
About BDO Canada’s private equity practice
BDO’s dedicated Private Equity practice helps PE firms and their portfolio companies navigate today’s complex global business environment across the entire fund lifecycle. This practical team has a profound understanding of the private equity industry, particularly in the Canadian mid-market space. Our people are part of the process at every level, interacting with funds, advising on deals, and working closely with portfolio companies to help them realize their goals.
