By Giancarlo DiZazzo, Head of Sponsor Finance, BMO Commercial Bank, Canada
At the 23rd Annual Capital Connection Conference, hosted by ACG Toronto, I had the privilege of sitting down with four of Canada’s leading private equity voices:
- Michael Hollend – Partner, TorQuest Partners
- Jennifer Pereira – Head of Private Equity, Fengate Asset Management
- Adam Shantz – Managing Director, ONCAP Management
- Andrew Walton – President and Managing Partner, Ironbridge Equity Partners
Over the course of an hour, we explored how private equity firms are navigating the investment landscape in Canada and the United States, defined by geopolitical uncertainty, technological disruption, and generational change.
Macro-Economic Landscape and Uncertainty: Canada vs. U.S.
Canadian businesses remain under pressure from tariffs and protectionist policies, compounded by consumer sentiment shifts and the lingering ambiguity around USMCA renegotiations. For private equity investors, this uncertainty is more than a headline—it’s a daily operational challenge.
“The conversations we’re having with the leaders of our businesses echo what many are asking: can we please have some certainty?” remarked Michael Hollend, Partner at TorQuest and member of the firm’s Investment Committee. “Private equity thrives on clarity. Ownership and governance give us agility, but when the macro picture is opaque, even the best-aligned teams struggle to make confident decisions”. Michael and TorQuest continue to have frequent dialogue with the leaders of their portfolio companies. “To me the fun and the power of private equity, is that you have ownership and governance and management, around the table talking at whatever frequency you think is the right one, very different from a public company context. Right now, everyone is holding their breath and waiting for the fog to lift.”
As pointed out by Adam Shantz, Managing Director of ONCAP and Jennifer Pereira, Head of Private Equity at Fengate Asset Management, many private equity firms manage portfolio companies that have ties to the United States, including ONCAP and Fengate which manage an approximately 50/50 split of assets between US and Canada. For Ironbridge Equity Partners, 11 of the fund’s 16 portfolio companies derive a portion of their revenue from the US.
“The threat of tariffs is very real. It makes it tough to do new deals” remarked Andrew. “Currently all of our companies are under USMCA but whatever five-letter acronym is going to come out to replace that, is the uncertainty. That makes new deals tough” said Andrew Walton, President and Managing Partner at Ironbridge Equity Partners. Much like other panelists, Andrew is not a stranger to challenges. “We navigated COVID. We came through supply chain disruptions – which was mass chaos. We dealt with inflation. We dealt with spikes in interest rates; But this new uncertainty, which is turning investing into betting, is a dangerous place for us to play.”
I asked the panelists whether they see a greater opportunity in Canadian domestic investments or are US targets currently more compelling given the ever-evolving investor sentiments and ongoing geopolitical uncertainty.
“It depends on which area of the economy you’re talking about,” said Adam. He believes that different sectors, like industrial, consumer and services, each have their own unique characteristics and attributes which would define investing strategy in each geography. “In Industrial, the fog has not yet cleared from the perspective of making levered investments, which can make it harder to invest in Canadian industrial businesses right now. Also, there’s not a whole lot that are coming to market because asset owners know that it’s a challenging time to invest in an industrial business in Canada.”
Adam believes that on balance, the US market may have an edge on consumer businesses as well, though there are opportunities in Canada. As for services: “I think it’s wide open on both sides of the border; We’ve seen a decent amount of flow in Canada and the same for the US. So [overall], my take is that it really depends, but on net, more time will be spent looking at deals in the US than Canada.”
Much like ONCAP, Fengate portfolio companies are split evenly between US and Canada.” I think the sectors that we are in, are a little bit less focused on industrial manufacturing, so we’ve been protected there” said Jennifer. She echoes the challenges of uncertainty pointed out by others but believes that there are natural mitigants to the tariff risk, by way of foreign exchange rates and products costs. She remains interested in both markets but points out the costs of tariffs in both countries. “The nature of passing the [tariff] price on to the manufacturer, and then the retailer and then eventually to the consumer…I think 2026 is going to be a really challenging year for the US consumer, and that will have knock on effects across many businesses. So I think uncertainty exists in both geographies and we are trying to be really thoughtful about pricing in that uncertainty.”
Bringing Deals to the Market in Uncertain Times
If uncertainty clouds investment decisions, it looms even larger over exit strategies. I asked the panel about how they feel about launching a sale process in this environment, and what are the key factors they consider in doing so.
Michael is no stranger to the sale process. “We all want the perfect market” he quips. “When we are selling a business, we want it to be amazing and robust and flushed with capital, and when we’re buying a business, we want it to be inefficient and challenged and have an edge. It never is that.” He paints a more realistic picture around the themes of uncertainty. “Underwriting is all about the willingness to part with certainty, the cash that we do have, in exchange for uncertainty, because you think you are going to get something better out of it. And in my 20+ years of doing this, this is about as uncertain a time as you’ve had to underwrite”. He points out the challenges that Andrew earlier discussed. “If all you are given, is a Company’s last three or four years of financials, I am not sure how indicative those are going to be about the future”, pointing out the macroeconomic landscape, trade wars and economic disruption. He prefers a realistic and honest approach to selling a business. “That would work for everybody and avoid heartache and headaches along the way”. Adam agrees: “You have to design a process that makes sense for the asset. Not every deal will warrant calling a lot of people and running a broad auction process”.
Artificial Intelligence and Impacts on Investments
Few topics spark as much curiosity as artificial intelligence. While headlines trumpet AI as transformative, private equity firms are approaching adoption with measured pragmatism.
“We have a team at ONCAP that focuses on using digital tools. AI is another digital tool in our tool box; a powerful tool. We’re seeing a lot of interesting use cases as part of solutions that we’re trying to implement,” said Adam. He views AI as best deployed in multi-faceted complex decision-making problems, but first, he’s focused on the immediate wins: “A lot of it is trying to educate the broader team at our portfolio companies to see how they can responsibly use AI to make themselves more productive, and have them use AI for day-to-day tasks, as opposed to these grand projects”.
Jennifer wants to demystify AI for her team and her portfolio companies. She believes that the first step is just repetition and using AI to streamline daily repetitive tasks. “We are seeing a lot of opportunities in portfolio companies because they may have labor shortages or have an SG&A challenge and we think there are real margins, if we’re able to thoughtfully put in agentic AI to automate some of the tasks that are happening today, like process orders”.
One common theme that all panelists agree on is that their use case for AI is not to replace their human capital. “Some people are concerned about our team becoming obsolete, which is absolutely not the case for us.” Said Andrew. “We want to focus on: how does this industry actually operate? What is the growth story behind this company? Those are the things I’d much rather my team focus on than the mechanics of a model”. For now, Andrew says the focus is for AI to make them more efficient at administrative tasks like reviewing legal documents, marking up NDAs, or transcribing and summarizing calls.
Transitions and successions
Private Equity firms in Canada are excellent at managing transitions inside portfolio companies, but I’m curious about how they manage transition within their own firms, whether it’s succession planning, generational turnover or evolving the investment strategy. A common theme emerged: Don’t wait until it’s too late.
Andrew himself has recently been the subject of succession as he has taken on the role of President and Managing Partner at Ironbridge. “That did not come as a surprise. Not to our investors, not to my fellow partners. This has been in the works for a long time,” said Andrew. Michael agrees; Much like Ironbridge, TorQuest has also been going through succession planning. “From outside looking in, it probably appears like an event, but from the inside, it’s very much a process.” said Michael. He points out six different topics that succession planning touches on. “It’s dealing with economics, governance, management, emotions, ego, and with people’s own existential sense of self”. He believes in isolating each topic and solving for them one at a time. “Transition is a long – I would think decade long – process that you have to do explicitly, not just all of a sudden wake up and realize that you’ve got to do it.”
Financing Transactions and Optionality
As a banker myself, I am curious to find out how private equity firms approach evaluating the ever-growing financing options. With the rise of private debt funds, the financing landscape for private equity transactions has expanded significantly.
Much like other panelists, Adam believes that it’s all about relationships. “We take on less leverage compared to our peers, especially in the US, so that we don’t have to rely on partners that we don’t know. That really pays off when there’s a challenge – and there will always be challenges. So if you don’t have somebody who is willing to work through a challenge with you, you’re going to have a bad outcome.” That’s why Adam prefers the partnership aspect of traditional financing. He views partnerships and relationships as long-term investments. Trust, he says, takes a long time to curate.
The rest of the panelists have similar views. While they view rates, covenant headroom and general flexibility as important aspects of financing, those areas typically take a backseat to broader themes around partnership, relationship and the ability to listen. “Every deal is different. Having a lender who listens, is very important” says Michael.
The Road Ahead
Private equity leaders in Canada and the U.S. are navigating an investment environment defined by uncertainty, complexity, and transformation. Geopolitical tensions, tariff risks, and macroeconomic volatility have made underwriting and deal-making more challenging than ever, forcing firms to balance agility with caution. While opportunities remain across sectors, the consensus is clear: strategy must be adaptive, and timing is critical.
Beyond market dynamics, firms are embracing technology—particularly AI—not as a disruptive force but as a pragmatic tool to enhance efficiency and address operational challenges. The emphasis is on incremental gains rather than sweeping changes, ensuring that human judgment remains central to investment decisions.
Equally important is the internal evolution of private equity firms themselves. Succession planning and leadership transitions are no longer episodic events but deliberate, decade-long processes that safeguard continuity and culture. Coupled with a financing landscape that prizes relationships over leverage, these themes underscore a broader truth: success in private equity today hinges not on predicting the future but on preparing for it—thoughtfully, patiently, and with resilience. During the discussions, Michael defined a healthy partnership as a group of people who can be honest, and vulnerable with one another. I am pleased to have had the opportunity to sit down with these prominent leaders and I am proud to call them partners.
