Private Equity in Canada

Private Equity Tutorials

If you would like to know everything about private equity in Canada, you are at the right place. In this article, we will talk about the private equity market, salaries, recruitment process, culture, top firms, jobs and exit opportunities in Canada.

Let’s look at the sequence of the article –

Overview of Private Equity in Canada
Private Equity Services Offered in Canada
Top Private Equity firms in Canada
Private Equity Recruitment in Canada
Private Equity Culture in Canada
Salaries in Private Equity in Canada
Private Equity Exit Opportunities in Canada
Conclusion

Overview of Private Equity in Canada

If we look at the update of 2016, we would see that Canadian private equity market didn’t do well in 2016. In 2016, Private equity market in Canada got contracted by 24% in value and the number of transactions got reduced by 19%.

However, 2015 was not at all bad. In 2015, PE deals shot up to $49 billion in value; but in 2016, it was just $31 billion in value.

But the question still remains why Private Equity in Canada was hit hard in 2016?

As we investigate, we see that the energy sector in 2016 didn’t perform as expected. In 2016, only 18 deals closed in energy sector; the total value of which was $3.1 billion. If we contrast with the energy deals in 2015, we would see that there were 36 transactions and the value of those deals was $7.1 billion.

According to Financial Post in 2016, three private equity investors – Hellman & Friedman LLC, PennanrPark Investment Corporation, and Thomas H Lee Partners LP topped the list, each closing three deals.

It was also found that the first three quarters were very fruitful in terms of deal closing; but in the last quarter, private equity market in Canada couldn’t live up to the expectation.

As a job seeker, how should you approach Private Equity in Canada? You need to see it as the inevitability of market’s usual characteristics. Sometimes the market will go up and sometimes the market will go down. And even if it hit the market badly, the consequences only last for few months; and again after closing few more deals, things will start to look brighter than ever.

If you are new to Private Equity, you may have a look at this detailed guide to Private Equity

Recommended Courses

Private Equity Services Offered in Canada

Canada follows the same footprints of USA private equity market and offers a myriad number of services. But before that, it’s important to mention the types of fund support offered by top Private Equity firms in Canada. The top private equity firms in Canada has a world-class operational infrastructure which supports different sorts of funds.

They are –

Sustainability
Buy-out
Life Science
Communications
Turn-around
Secondary funds
Mezzanine

Top Private equity firms in Canada provide all of these fund types and offer specialized support to each and every sort of need to its customers.

Now, let’s talk about services.

Funds establishment & structuring: Only providing funds to the companies wouldn’t suffice until the top private equity firms help companies with the method of establishment and mention the ways of structuring them.
Fund accounting: Along with fund establishment & structuring, private equity firms also provides fund accounting to the respective firms to ease up the process.
Global private equity technology services: PE is not a regional phenomenon and it has been spreading its wings globally. And to offer a grip to the companies, top private equity firms offer a world-wide perspective through global private equity technology services.
Fund administrative services: Providing funds is not the only thing Private equity firms do in Canada. They offer many other ancillary services as well. One of the most significant ancillary services is fund administrative service, which is offered by private equity firms in Canada to the respective companies and to help them take the leap from point A to point B.
Transferring agency & corporate secretarial services: Though Private Equity in Canada mainly handle different size of deals; they also offer transferring agency & corporate secretarial services to the companies which are directly connected with PE firms.
Complementary services: Other than above, top private equity firms in Canada also offer various complementary services like global custody, cash management, foreign exchange, and securities lending.

The purpose of providing all these services to the respective private companies is to ensure that the companies make a swift transition between where they were to where they want to be. And these services are applicable for all sorts of funds (small and big) at all levels.

Top Private Equity firms in Canada

Leaders League has come up with a list of top private equity investors (on the basis of Leveraged Buy Out) in Canada in 2016. The rankings had been done on the foundation of most preferred Private Equity in Canada in LBO – leading private equity firms, excellent PE firms, and highly recommended private equity organizations.

Let’s have a look at them one by one.

Leading: Leaders League had mentioned four names under the leading private equity firms in Canada in 2016, which didn’t match with the report given by Financial Post. Let’s have a look at them –

Birch Hill Equity Partners
Crestview Partners
Hellman & Friedman
TPG Capital

Excellent: These firms are not the most influential in 2016 according to Leaders League, but there are holding the second rung in terms of preference in the market –

Abacus Private Equity Group
Caisse DE Depot ET Placement DU Quebec
Citic Capital Partners
CPP Investment Board
Novacap Investments
ONEX Partners
Teachers’ Private Capital

Highly recommended: After leading and excellent Private Equity firms in Canada in 2016, here’s a list of firms which were highly recommended by Leaders League –

ARC Financial
Centerbridge Partners
CI Capital Partners
Edgestone Capital Partners
Fonds DE Solidarite
Fosun Capital Group
Serruya Private Equity
Westerkirk Capital

Private Equity Recruitment in Canada

Let’s say that you have just graduated from college and you are rearing up the idea that private equity would be your first job. How would you approach the whole recruiting process?

In this section, we will talk about the recruiting process in private equity in not only Canada but in most of North American countries.

Let’s look at the process step by step –

Timeline

The timeline in the recruiting process is the most important thing to keep in mind. Here’s a brief overview –

On-cycle interview session: During the late January to March, the on-cycle interview session starts. The schedule isn’t always set, but the time frame is always from January to March.
Off-cycle interview session: After March, the off-cycle interview session starts and it goes for a long time.

How recruitment process starts (in PE firms in Canada):

As you already know entering into Private Equity in Canada isn’t easy. You won’t be able to apply through online portals and there is no means for online applications. The alternative is that the head-hunters will reach you for any open positions at private equity firms. Each private equity firm hires a head-hunter to execute the whole recruitment process. Once the whole process is done and a new hire joins the private equity firm, the head-hunter will be paid a fee based on the pre-determined percentage of the salary of the new hire. So, your success of getting hired is dependent on the head-hunter. If the head-hunter doesn’t recommend you to be an excellent candidate for hire, your chance of getting into the Private Equity in Canada is almost bleak.

First Screening

So how would you make an impact? The answer is you need to think from the head-hunter’s perspective. Whenever you are called for the first interview, it is a method of screening. This primary interview will filter the best candidates from a series of candidates. And that means, the head-hunter will judge your every move; even if s/he would be pretty nice on the surface. The PE firm is the client of the head-hunter, not you. And if the head-hunter fails to deliver best/ high-caliber candidates, then the precious time of the client would be wasted and the head-hunter risks being replaced with another head-hunter. So, s/he will only recommend you, if you’re the best candidate of the lot (in knowledge, skill, willingness, and attitude). So, before the first screening, you need to prepare hard. Preparation is the key to make an impact on the head-hunter and to ensure that you get selected for the next round.

On-cycle interviews

After the screening, the on-cycle interviews are conducted during January-March. And typically, the offer is extended within a short weekend in the case of mega funds. PE interviews wouldn’t be like investment banking. Big Private Equity in Canada make quick decisions and they select the best and most suitable candidates within 3-4 days of interviewing process. So, the idea is you need to be always ready for the interview. If they ask you to come at an interview at 2 a.m., you should be ready to go for the interview. Also, have a look at this Top Private Equity Interview Q&A

Off-cycle interviews:

Off-cycle interviews are conducted for an extended period of time, usually after March. Generally, the interview process will take longer than on-cycle interview session. You will be interviewed and if you do good, you will be informed within a short period of time; but the offers will take more time.

Format:

There are usually three rounds for both on-cycle and off-cycle interviews. First, there would be a first round interview, then a case study analysis or a financial modeling skills test, and finally there would be the final round with Partners of the Private Equity firms in Canada.

Exception:

After mentioning the whole thing, it’s important to mention that the recruiting process in Canada is not always structured (especially for pension funds). Along with getting hired by the head-hunters, people with experience also get hired by references or recommendations.

Private Equity Culture in Canada

The work culture in Canada is a bit different than USA. As Canada has a relatively small market in private equity than USA, there are fewer mega-funds and most are small and in-between funds that private equity firms handle.

The working hours are around 70-100 hours a week depending on which firm you work in and the size of funds you handle. As a result, the work-life balance always can’t be maintained.

However, if you stick around for 2-4 years in private equity in Canada, you will move on to a higher rung where you will work usually lesser hours than your juniors.

Salaries in Private Equity in Canada

The salary in private equity is huge as you already know. In Canada, there’s a simple structure which is being followed by big private equity firms. The below-mentioned salary is for first-year private equity professionals and as you move on to higher rung, your salary would increase gradually –

If you are in Canadian private equity market and you join the pension funds; you would earn around $150,000 per annum.
If you are at the beginning stage of your private equity career and join a mid-cap private equity firm, then your salary would be around $200,000 per annum. Can you see the difference between joining a pension fund and a mid-cap fund? Yes, the difference is $50,000 per annum in salaries.
Lastly, if you join at Onex, your salary would be more than $250,000 per annum.

So, from the above information, it’s clear that depending on the private equity funds you decide to join in; your salary would greatly be affected by that. Moreover, you also need to keep in mind that, your salary is also directly proportionate with the hours you put in. And the working hours are highly dependent on the funds.

Private Equity Exit Opportunities in Canada

Before you ever decide to exit private equity in Canada, first be clear about why you would like to exit at the first place? Do you worry about the working hours? Or you’re not happy with the salary? If salary is your thing, you can look at top-notch firms like Onex, Birch Hill, Brookfield, and Imperial, which pay havoc in terms of salaries.

And if you’re worried about working hours, then you can stick to private equity still for some time and get promoted to higher positions.

Because in Canada, it’s difficult to go to other fields from private equity! It’s relatively easy to come into private equity from investment banking background; but not easy to move out to something else.

However, with enough networking and cold calling, you can land up interviews in investment banking, hedge funds, if that’s what you aim for.

In the final analysis

In Canada, the private equity market is always not stable. But few top-notch firms which execute major deals are usually unaffected. So since the beginning, try joining the big firms if you want to stay in Canada. Otherwise, you can always move out and join USA private equity market. The only requirement, in that case, would be a top-notch degree from a reputed university in the USA.

Private Equity in Canada