🍁 Canada’s Growth Problem
💸 Canadian Valuation Gap
🧭 Strategic Choices
🍁 Canada’s Growth Problem
Canadian businesses are undercapitalized.
This is a rant, because I am fed up. Canadian banks are earning massive profits at the expense of Canadian businesses.
Weekly, I speak with business owners facing special loans. They’re doing the real work to improve cash flow and profitability, but the banks are effectively saying without saying, “We don’t want your business, because your industry is too risky.”
Canadian banks are actively pulling out of industries hit hardest by tariffs and uncertainty: construction, automotive, manufacturing, logistics and transportation.
I listened to a banker say to a client, “Just like you, we’re a profit-first business.” They sure are! The big six banks earned $19 billion in profit in the first quarter of 2026, up 35% year-over-year.
According to Senator Colin Deacon, for over 20 years the banks have earned a 30% annual return on equity, which is three times higher than banks in the US and comparable countries.
I’ll say it: The big six are profiteering off Canadian businesses, and it stifles innovation, growth, and resilience against economic shocks.
The media is focused on geopolitical issues, but the real growth issue for Canadian companies is structural. Provincial trade barriers mean it’s easier to do business north to south with Americans than it is to do it east to west with Canadians. And access to capital is limited, and only when it’s opportune for the financial institutions.
💸 Canadian Valuation Gap
It’s a story as old as time: Business owners believe their business is worth more than it is. For Canadian businesses, it may be true.
I joke it’s the “Canadian Tax.” But it’s legit. Mid-market Canadian companies are valued at 4 to 8 times EBITDA, whereas equivalent US companies are valued at 6 to 12 times.
Canadian companies are valued for less because of location.
This has two significant implications for Canadian business owners:
First, you may not be able to rely on a big payout at the end. You can mimic a liquidity event over 10 years by paying yourself a dividend to reinvest outside the business.
Second, build a better, more competitive business. Canadian companies have to build better businesses to achieve full valuations.
Our ambition for members of CoStrategy is to build a business so good that the only way to compete with you is to buy you. A strong valuation starts with an effective growth strategy.
Our next CoStrategy Group starts on July 1st. Message me for an info kit.
📊 One Stat to Watch
$1,448
You thought $100 oil was expensive. The 2026 crop of maple syrup is averaging $1,448 per barrel! 🥞
🧭 Strategic Choices
When a business says “yes” to one initiative, it is saying “no” to another. The choices you make define your growth strategy.
The bigger a company gets, the harder those choices become. You find multiple opportunities arriving at the same time. And often they all feel too good to pass up.
A growth strategy is anchored on an investment matrix: Where do you focus your capital and resources to maximize your growth and valuation?
- Strategic Fit: Does the opportunity build the infrastructure and capabilities to reach the next stage of growth?
- Valuation Impact: How does the investment improve the company’s profitability, growth, or competitive advantage without adding undue complexity or cost?
- Capital Reality: How do we fund it without starving the core business, or getting over our skis in debt?
- Execution Capacity: How do we develop the team, systems, and capabilities to realize the investment to its fullest?
Growth isn’t driven by chasing every opportunity. It’s driven by going all in on a few strategic choices that compound value.
Learn how in CoStrategy.
🤔 Thoughts on Today’s Issue?
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