Growth and Exit Strategies in Canadian Private Markets: Five Key Takeaways

Canadian private markets continue to evolve against a backdrop of tighter fundraising conditions, a more diverse investor landscape, changing exit dynamics and heightened regulatory scrutiny. For fund sponsors and private companies alike, navigating this environment requires greater flexibility in how capital is raised and deployed, careful alignment among stakeholders and earlier planning for transactions and exits.

Davies partners recently presented on strategies for growth and exits for the Canadian Venture Capital and Private Equity Association (CVCA). The discussion explored the forces shaping the market today and the resulting practical considerations for fund sponsors, investors and companies.

Key Takeaways

• Capital raising: a tighter market and a wider net. Canadian VC firms raised just over $2 billion in 2025, down sharply from the $7 billion-plus raised in each of 2021 and 2022, with the top five firms capturing over 75% of that total. Sponsors will principally be differentiated on track record to stand out in a crowded field, but may also be able to leverage unique strategies and an increased focus on investing in Canada by non-Canadian investors. On the capital-supply side, Canadian institutional money has gravitated toward larger cheques deployed abroad, although commitments like CPPIB’s C$750 million allocation to Northleaf’s mid-market PE program may signal a renewed domestic focus, and fund sponsors are looking to family offices and non-Canadian investors to fill the gap.
• Alternative structures: thinking beyond the blind pool fund. Separately managed accounts (SMAs), single and multi-asset co-investment vehicles, continuation vehicles and minority GP stakes transactions are all gaining traction as alternative ways to raise capital. SMAs and co-investment vehicles, including multi-asset, discretionary co-investment vehicles, are becoming increasingly important aspects of the GP-LP relationship, offering an efficient way for LPs to deploy capital while increasing overall returns. Continuation vehicles provide LP liquidity in a sub-optimal exit environment, while minority GP stakes transactions are on the rise in Canada, offering the potential for access to new networks and operational support alongside founder liquidity. In each case, conflicts of interest, particularly around the allocation of investments and key person time and attention, require careful management.
• Growth capital: navigating competing demands in a complex investor landscape. As companies layer in institutional investors, strategics, Crown corporations and family offices, each with distinct priorities, early engagement with existing shareholders and careful lead-investor selection are essential to keeping a financing on track. Companies should pay careful attention to the implications of the growth investments being made by new investors to the company and its existing investors, including from a tax perspective. Companies should also consider building infrastructure from the outset to track investor-specific requirements, which may range from PFIC reporting and ESG metrics to board observer seats and drag-along rights.
• Exits: matching the path to the moment and starting early. Strategic sales can deliver a synergy premium and full liquidity, PE buyers offer execution speed and a potential “second bite” through rollover equity, and IPOs unlock public capital – but each route carries distinct risks that must be matched to the company’s stage and stakeholder alignment. Whichever path is chosen, legal and corporate housekeeping – confirming IP assignments, cleaning up the cap table and assessing change-of-control triggers – should begin 12–18 months before a potential exit, not when a buyer is at the door. Preparing a vendor due diligence report, organizing a data room and modelling tax outcomes early can reduce re-trading, speed R&W insurance underwriting and keep the deal on schedule.
• Regulatory landscape: expanded Investment Canada Act (ICA) and Competition Act scrutiny. A new pre-closing ICA notification requirement for certain types of investments in sensitive sectors is expected in 2027, adding another layer of planning for cross-border transactions. In addition, recent Competition Act amendments have introduced structural presumptions in merger review and changed the applicable remedy standard for mergers – and statistics show that many deals are taking longer to clear. Foreign acquirers should evaluate whether either or both the ICA and the Competition Act apply and adjust their timelines accordingly.

Taken together, these developments point to a private markets environment in which flexibility and advance planning are increasingly important. Fund sponsors are looking beyond traditional sources and structures for capital, companies are managing a broader range of investor expectations, and both growth and exit transactions require earlier consideration of legal, commercial and regulatory issues. Building these considerations into the strategy from the outset can help preserve optionality and support smoother execution as opportunities emerge.

If you would like to discuss any of these themes or how they map to your strategy, reach out to any of the Davies partners listed below.