Cormark got sold, Eight was sort of acquired, the super small guys like M Partners are gone, and Stifel seems like a sinking ship.I am also hearing that Clarus is up for sale.
What is the future in the boutique market here? It is a great market for mining, so I would think there is a rising tide for all of the boutiques. Who is a good contender to be number 2 boutique under CGF?
I might not like the boutiques, but I am a fan of Canada and they have an important function in a country that struggles with the idea of risk capital.
As someone with a family business and advisory firm in Canada myself I can tell you that part of this is personal. These founders have families too and they’ve planned their exit so they can retire. Consolidation allows them to transition their arm with rollover equity, incentive to maximize their retirement further with a guarantee take home to walk away.
This may not be the answer that you were looking for, but from a guy with a family business, like one of these firms this is part of the reason for sure.
Retirement - sure, ok. The real underlying reason is that Canada is over. There are no actual businesses to even advise, which is why most "boutiques" are either business brokers or junior miner ECM merchants. We don't even have a middle market which is reflected in the IB """scene""". Canaccord, RJ, Stifel(?)... then what? Osprey? Fort? Origin Nepo Partners? Where are all the Blairs and Stephens and Harris Williams and Lincolns and Bairds? I mean seriously think about it, what do we even do in this country besides dig up rocks and protect the handful of telcos and banks we have from any competition whatsoever? Same reason why there is no VC - nothing to invest in. Also why there is no oncycle recruiting and more career bankers - there's a severe lack of decent PE platforms outside of the pensions, because again, we aren't a country that actually does anything.
Sad but true
The supply issue on businesses to bank is a really good point. And you can see the billions of dollars of unallocated funds from the government as proof on the demand side. Even look at the separate programs they have made in a FoF structure - it is sad.
I don’t spend a ton of time in the Canadian market but was doing a meeting book for a public (TSX) Canadian business with like $30M of EBITDA. There are US companies in my sector (industrial focused) with $300M+ EBITDA that get effectively no equity research coverage but this tiny company had like 8 banks covering it lol. Common across the few other Canadian clients I have too. Just not much to do I guess relatively speaking
your logic re why there's no middle market investment banks or advisory is sound and is based in reality - i agree. regulation and general risk aversion sums it up pretty well. but the "canada is over" and "we don't do anything" is objectively false and lame af - and it makes you come off uneducated lol. there are 190 (95%) sovereign nations that are smaller and poorer than us. from purely a capital markets perspective "we dig up rocks" and we're pretty fucking good at it too. probably some of the best metals and mining talent in the world - everyone from the bankers, to the management, to the boys in the rigs digging the hole. all top global talent in their fields. there's not a single global mining deal that comes out of new york that BMO isn't on. so sure the banks are over regulated but they're also rock fucking solid. there's a reason the exchange was 1.10USD during the GFC. not going to repeat the point for O&G. you know this an take it for granted and its so annoying to listen to people talk with such entitlement
congrats on BMO M&M!
Agree with a lot of this. The reality is there are still Canadian businesses being marketed and sold, but they are largely deals being done by U.S.-based or International banks. Also, speaking about Canada in generalities is hard given provincial nuances. For example, "VC" is alive and well in Eastern Canada as many of these opportunities are government subsidized. There are a handful of Canadian VCs that have printed above market returns by leveraging their networks to gain access to these opportunities. The other sector I'd call out with some decent activity outside of O&G/Nat. Res. is Ag more broadly. Ag is big business in Canada and that market has seen consolidation. Separately, there is also the pocket of Consumer/F&B activity in BC but again, most of those companies are engaging U.S.-based advisors.
It's not ridiculous to say that
where does agentis stand? any idea what their first nations partnership is?
A way to get added to the syndicate of all kinds of financings in the resources space, and any syndicated deal involving the government lol. Absolutely genius money printer
what does this mean
Any opinions on IJW & Co?
they pay quarterly bonuses
Does anyone know ATB's plan with cormark? lot of synergies coming?
Another problem with Canada is our banking industry is too risk-averse (im talking about the commerical banking side) and don't feel the need to 'compete' for business as most of the banking is controlled by the big 5. This is evident when small businesses try to get any loans from banks, its way harder for Canadian SMBs to get loans from banks vs American SMBs. This leads to fewer new businesses being formed in Canada and we're just stuck with the same big old companies, hence less need for advisory services. Also the big 5 banks and big 4 acct firms have their internal mid-market advisory team, making it harder for boutiques to compete at the MM level. Agentis is successful because they focus on infra and mining and they pay well.
At least Canada still has Constellation Software
Lots of structural problems with Canada regarding the economy and development. Generally, its growth and productivity significantly lag the U.S. which has created a shortage of businesses looking to transact.
On the flip side, I've worked with some Canadian public company buyers in the past and had good experiences. The general take on them is that they are cheap, partially because their valuations also lag those of U.S. counterparts. But, when they can find an angle to compete, they do things right and move with pace.
lol would be interesting to see what happened between 2005 and 2015 in Canada...and if there were any lessons to take from it?
Look who was running the country when it was doing well... Look who is running the country when it isn't... Pretty clear lesson
Even tho the liberals didn't help,oil prices had a lot to play into the growth and slowdown of the economy.Of course baking regulation and protectionism played a role but it wasn't all the liberal's fault
All of those firms basically set up engines to do ECM for small / mid caps, with some advisory flavor. With all the consolidation on the Canadian buy side, there are very few small cap funds left. Which makes it very tough to raise capital for sectors outside of resources.
Mining continues to boom but you can't be beholden to the commodity cycle. Many many lean years in the bust part of the cycle.
Any boutique with proper advisory capabilities beyond fairness opinions will be just fine. Contrary to many of the posters here, there are tons of good small/mid cap companies worth banking. But you have to be thoughtful and position mostly for advisory work. The bulk of every one of those businesses I speak to has inbounds from sponsors, family offices etc., so there is work to do.
The days of just dropping a bought deal letter in front of any and every small cap and picking up a fee is over. Frankly, it's about time. That model has not been great for Canadian public markets.
Simply no more junior mining ECM deal flow to justify starting new ones paired with some of the top guys at the existing ones looking to retire
CS!
Are you living under a rock?
Boutiques also do not have good access to the sponsor buyer universe (true with the Big 5 too), so they lose to U.S. firms.
Bottom line - just because you see 3 / 4 boutiques get scooped up does not mean the sky is falling down. Still lots of solid boutiques in Canada.
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