How an investment bank is attempting to support Canadian innovation

This article was posted on Wealth Professional on Oct. 11th, 2016

FirePower Capital Corporation, a Canadian leader in entrepreneurial investment banking, has announced a pioneering asset management arm to exclusively offer debt financing to lower mid-market Canadian businesses.

The FirePower Private Capital Division promises to be a specialist “Gap Debt” Lender, aiming to help lower mid-market Canadian businesses find the capital they need to sustain growth. With more than $300 million in transactions across a variety of sectors and industries under its belt, the firm has developed the ability to appraise a business’s enterprise value and future prospects, and not just its assets.

“In the lower-mid market, lenders generally are not capable of providing the same level of service and due diligence that they provide for larger transactions, as it’s not economically viable,” said Jared Kalish, co-founder and head of Firepower Private Capital Division. “As a result, smaller transactions are often assessed using a ‘check-the-box’ approach, which relies on tangible assets rather than focusing on cash flow and enterprise value.”

“With our background, expertise, and technology, we will be literally filling the gap in providing financing options to the lower mid-market, hence the term Gap Debt,” said FirePower Founder and CEO Ilan Jacobson.

The new division is backed by FirePower principals, outside investors, and a strategic partnership with a US-based private investment firm, all of which combine to give it access to over $100 million in capital. This will be used to fund loan sizes ranging from $500,000 to $5 million.

“Quite simply, businesses here do not have access to what their U.S. counterparts do in terms of next-stage, growth financing, which is stifling innovation and giving Canadian entrepreneurs a bad rap,” said Jacobson. “We plan to fill that gap.”

Case Studies

Versature is a rapidly growing Canadian VoIP service provider that had been through an unsuccessful sale process with another corporate finance firm. FirePower’s M&A Advisory team crafted a story highlighting Versature’s strong growth, brand, people and processes. The most compelling offer came from net2phone, a subsidiary of US public company, IDT. Under this new ownership, Versature is well-positioned to accelerate its growth trajectory.

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