Monday Market Minute | May 12, 2025

PE exit activity picks up as valuation certainty returns to select sectors

What Moved

CVCA data showed Canadian PE exit activity in Q1 2025 rose 28% by value compared to the same period in 2024. The improvement was sector-specific: healthcare services, Canadian tech platforms, and domestically focused consumer businesses attracted buyer interest at narrowing valuation gaps. Several mid-market exits achieved 3-4x multiples, suggesting that the two-year exit logjam was beginning to clear. Notably, strategic buyers — not just financial sponsors — were returning to the market, indicating genuine sector confidence rather than mere liquidity-driven dealing.

Why It Matters

Exit improvement was the missing piece of the PE puzzle. Fund managers sitting on aging vintages needed liquidity events to return capital and demonstrate performance. The improving exit environment validated the thesis that Canadian domestic-focused PE — shielded from tariff exposure — offered attractive risk-adjusted returns. For investors evaluating new PE fund commitments, the Q1 exit data provided evidence that the deployment-to-realization cycle was functioning again, reducing the duration risk that had concerned allocators.

Signal to Watch

Whether the exit momentum extended to cross-border deals, where tariff uncertainty still depressed buyer appetite, or remained concentrated in purely domestic transactions.

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