|1||Early stage market compared to the U.S.: Comparing the markets, Michelle Alphonso, Director at Transaction Advisory Services Grant Thornton remarked, the mid-market in Canada would be the lower mid-market in the U.S. Canadian companies are smaller and more regionally-focused compared to those in the U.S, according to Valerie Scott, Principal at Swander Pace Capital. The other area of concern is the banking and financing in Canada. There are 5-6 banks and not much syndication between them.|
|2||The market is less sophisticated: The financial information of the companies is less sophisticated, Michelle Alphonso mentioned. Also, the business owner’s ability to talk about the financial data is less than it would be in the U.S. EBITDA as per the standard definition might mean one thing, but across most Canadian marketplaces, EBITDA might have an altogether different meaning. To mitigate this issue, it is important for the investors to have a conversation with the business owners to get such things standardized so that they both can be on same page.|
|3||Market for Private Equity is still in its nascent stage: Daryl Yap, Partner at American Industrial Partners says that investors will have to allay the fears of the companies as there might be a bias towards Private Equity Groups, given the market is still young.|
|4||Excess capital chasing fewer deals: The Canadian market is a fairly small market, according to Valerie Scott and Michelle Alphonso, and firms and pension funds have a lot of capital at their disposal, which leads to excess capital chasing fewer deals.|
|5||Valuations are lower: There is a growing interest by American. investors in Canadian companies, according to David Clark of Financial Sponsors Group Raymond James. The interest is primarily driven by the low valuations of the Canadian companies. The leverage tends to be lower compared to the debt markets in the U.S., leading to low valuation of the Canadian companies. Also, another reason to invest is to expand the operations of the company in the U.S.|
is this the full name of the company or a department at Grant Thornton?