Smaller deals dominate Canadian private equity in first quarter, report finds
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Small deals were the focal point of Canada's private equity market in the first quarter of 2025, with a total of $18.2 billion invested across 141 transactions, according to a new report from the Canadian Venture Capital Association.
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While one mega-deal — the $14 billion recapitalization of Montreal-based GardaWorld Security — accounted for the bulk of the total dollar value, the vast majority of the deals were valued at under $25 million.
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'Even with elevated market uncertainty, private equity continues to act as a value-creation lever for Canadian businesses,' said CVCA chief executive Kim Furlong. 'Behind the headline mega-deal, we're seeing consistent interest in mid-market opportunities, with firms focused on long-term growth and acquisition-led strategies,' she added.
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Smaller deals dominated during the quarter: 80 per cent of all transactions were valued below $25 million and the quarter's average deal size was slightly under $12 million, excluding the mega-deal. That is on par with levels seen in the Canadian PE landscape over the last few years.
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Canada's venture capital (VC) market meanwhile recorded significantly fewer deals this quarter with $1.26 billion across 116 deals, compared to 146 deals in Q1 2024 and 187 in Q1 2023. The trend toward larger deal sizes — the average climbed to $10.89 million this quarter from $8.94 million a year ago — highlights the continued focus on a smaller number of high-value deals with later-stage companies raking in the bulk of the capital. The numbers 'reflect a recalibration across the ecosystem,' the report said.
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Furlong warned about the 'persistent slowdown' in deal volume, particularly for pre-seed and seed-stage investments, which has plummeted to levels not seen since 2020. '(It) is a signal we cannot ignore. These early investments are the pipeline for future growth. A weakening at the foundation threatens the innovation economy we've worked hard to build.'
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The industrial and manufacturing sectors took the top spot in PE deal count, with 37 transactions totalling $1.6 billion. The financial services sector recorded $1.2 billion in investments, while the information, communication, and technology (ICT) sector saw the second-highest deal count at 33 deals worth $460 million.
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The ICT sector dominated VC activity in Q1 2025, raking in $807 million, or more than half of all VC investment, across 58 deals. Life sciences came in second, recording $218 million across 23 deals, followed by cleantech, which attracted $128 million across 12 deals.
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