Nearly 50,000 Quebec businesses are set to change hands in the next decade, part of a wave of small and mid-sized firms facing ownership transitions. “Entrepreneurship through acquisition,” or ETA, lets aspiring entrepreneurs buy and grow existing companies through funds that finance their search.
The practice is taking root in Canada’s largest province. “Our goal is to demystify this path to entrepreneurship,” said Patricia Riopel, who launched Magnum Capital Partners with her husband, Enrico Magnani, to invest in search funds after launching and successfully exiting one herself. Riopel in 2017 acquired Scribendi, an AI-powered editing and proofreading company.
With a $2 million commitment from the Business Development Bank of Canada’s Thrive ETA Fund, Magnum Capital will back women-led search funds in Quebec. “The search fund model provides a vital solution to the succession crisis facing many Quebec businesses,” said Riopel. “It empowers the next generation of leaders to build upon the legacy of successful companies, ensuring their continued growth and contribution to the Quebec economy.”
Women lead less than one-quarter of the more than 700 search funds that have launched globally.
Gender lens investing
The Business Development Bank of Canada launched the Thrive ETA Fund last month with $50 million to help 60 women purchase and operate existing businesses in Canada.
One goal is to keep the businesses in local hands amid an escalating trade war with the Trump administration; another is to boost the number of women-led search funds in Canada.
Magnum Capital is “a firm led by a trailblazing woman who knows firsthand the challenges and opportunities of being a search fund entrepreneur,” said BDC’s Sevrine Labelle, who leads the Thrive ETA Fund. “With more women in investing roles, the landscape will naturally shift to be more inclusive and supportive of women choosing this path to ownership
Fundraising
Magnum Capital is raising a $20 million private equity fund to co-invest alongside up to 40 search fund entrepreneurs to acquire and operate lower middle-market businesses, particularly in asset-light and service-based sectors. The Montreal-based fund will have a primary focus on Canada but will also invest in the US.
“Their fund will surface the next generation of talented business operators that will define the Canadian landscape, and inspire countless others to follow in their footsteps – essential as we navigate through this unprecedented business ownership transition,” Labelle told ImpactAlpha.
Magnum Capital secured an $8 million first close earlier this year with backing from individual investors in Quebec, as well as family offices and other institutional investors in North America and Europe.
Other Canadian funds focused on entrepreneurship through acquisition include British Columbia’s Regenerative Capital Group, which helps purpose-driven impact entrepreneurs find and acquire growth-stage small and mid-sized social enterprises.
