There is a well- documented demographic shift underway that is driving a massive transition in the ownership of small and medium-sized businesses. According to CIBC, an estimated $1.9 trillion in business assets are poised to change hands in Canada over the next five years. By 2022, that number is expected to increase to at least $3.7 trillion as 550,000 owners exit their businesses.
Most of these entrepreneurs don’t simply want to cash out and retire. They often want to remain active in the business and typically have a number of goals including: preserving the legacy they have worked hard to build; sourcing capital to take the business to the next level; “de-risking” by selling a portion of their equity position (“taking some chips of the table”), and; increasing management’s participation in the business.
Kensington’s private equity strategy is focused on investing in these entrepreneurial, mid-market companies where we seek to provide capital to facilitate ownership transition and organic or acquisition-driven growth. We typically look to invest in companies with a strong management team and a proven business model. We are flexible and creative in our transaction structures and can take majority or minority ownership positions.
Given our team’s extensive operating and financial experience, we understand the challenges faced by owner-managers and can add value in a variety of ways beyond providing capital. We have worked with companies to: develop disciplined strategic and financial planning & reporting; optimize capital structures; source and execute M&A transactions, and; implement ownership and incentive arrangements to align interests. We are a partner and trusted advisor to owners and management teams as we work together to build the value of their businesses over the long term.