20 May 2025
Private Equity in Québec in 2025: A Practical Guide to Attracting Investors in an Uncertain Environment

Author : Jeff Li
In recent years, Québec has stood out as a dynamic hub for private equity, thanks to the multitude of institutional, quasi-institutional, and other types of funds present in the region—despite an international economic climate marked by uncertainty, especially due to one of our key economic partners, the United States. While our southern neighbors face a likely economic slowdown, increased market volatility, and both internal and external political tensions, Québec (and Canada), with its resilience and solid economic foundations, continues to represent a genuine opportunity for mid-sized businesses.
Why Québec is Attracting Attention in 2025
- A Contrasting Economic Climate
U.S. International Context
- Macroeconomic volatility: Weak or even negative growth, coupled with political uncertainty and inconsistency, has created a wait-and-see attitude among many North American investors.
- Higher banking credit costs: With the U.S. Federal Reserve’s rate at 4.5% compared to 2.75% in Canada, access to financing—and the psychological barrier of interest rates—is more favorable for investments in Québec/Canada than in the United States.
Québec: Stability and Opportunity
- Relative economic predictability: Québec benefits from a stable regulatory framework and relatively prudent macroeconomic management (aside from perhaps some government spending). Despite a recent downgrade of Québec’s credit rating, both provincial and federal governments remain fairly conservative in their measures and ambitions.
- Renewed economic patriotism: Due to business culture, regional roots, strategic continuity, and even nationalism, not only consumers but also decision-makers and investors are seeking to strengthen their presence in their local and national markets. U.S. policies have also dampened enthusiasm for expansion to or from the United States.
- Public incentives: In addition to public institutional players, Québec continues to offer generous support for research and development, complemented by Canadian federal aid.
- A Wave of Ownership Transitions to Seize
- Retirements: Many owner-operators are preparing to exit their businesses. Private equity is becoming a preferred tool to structure these transitions and ensure business continuity.
- Professionalization of the market: Companies and advisory firms are better prepared, which secures transactions and reassures investors.
- Service industries: Several service sectors in Québec are less affected by ongoing trade conflicts.
Opportunities and Threats for Québec Entrepreneurs
Opportunities
- Access to strategic capital: Funds are seeking well-prepared businesses ready to support long-term growth. Additionally, private equity funds appear to hold record levels of dry powder (available capital).
- External growth: Funded companies can become buyers themselves, taking advantage of the retreat of some international players.
- Valuing local expertise: Québec’s know-how in areas like technology, clean energy, and digital transformation (among many others) is attracting attention.
Threats to Watch
- Potential increase in due diligence demands: Investors are becoming more cautious in the face of global uncertainty, supply chain issues, and labor shortages.
- Pressure on valuations: This may create valuation gaps between buyers and sellers.
- Increased competition for quality deals: There are fewer transactions but more capital chasing high-quality targets.
What Investors Are Looking for in 2025
While the criteria remain consistent, their importance is heightened:
- Strong financial health and relative predictability
- A realistic growth plan based on a potentially shifting environment
- High-quality leadership with openness to partnership and an orderly transition
- Strategic positioning in promising sectors
How to Prepare Effectively
- Optimize financial and operational processes
- Structure a clear growth—and even exit—strategy
- Anticipate restructuring before (clean-up, preparation, planning) and after closing (synergies, culture, alignment)
- Strengthen governance and surround yourself with the right advisors
Pitfalls to Avoid in Times of Uncertainty
- Overestimating valuation: A well-structured deal with balanced risk allocation is better than one where the risk lies entirely on one side.
- Lack of transparency: Investors don’t want empty promises. Any issue uncovered during due diligence that wasn’t previously disclosed can reduce trust and delay the process—or even kill the deal.
- Neglecting the human aspect of the deal: Success depends on the buy-in of key teams—whether in operations, leadership, or among the various advisors (financial consultants, accountants, lawyers, tax specialists, brokers, etc.).
Conclusion
In a world where economic benchmarks are shifting rapidly, Québec stands out as a strategic investment location. For entrepreneurs ready to get organized, welcome a partner, and focus on growth, the conditions are right to attract smart capital and create long-term value. For buyers, many opportunities still remain.
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