A hold/sell decision made on multiple alone is usually made on the least reliable input available — there is no published Canadian market multiple to anchor it to. The reliable inputs are the fund's own mandate, a real statutory deadline, and the arithmetic of growth already achieved.
Key takeaways
STEP 01 OF 10
The most reliable input into a hold/sell decision is internal: where the platform sits against the fund's vintage, its target hold period, and the return the investment committee originally underwrote. A platform performing ahead of thesis is not automatically a sell signal, and one performing behind thesis is not automatically a hold signal — both cases still have to be tested against the remaining fund life. See search fund and independent sponsor for how this question differs when there is no fixed fund term at all.
STEP 02 OF 10
If the platform was built on a roll-up thesis — buying smaller businesses at a lower multiple than the platform itself could command — the hold/sell test is whether that arbitrage still exists today, not just whether EBITDA has grown. A platform that has run out of accretive add-ons to buy has lost the multiple-arbitrage leg of its own thesis, whatever its organic growth looks like. See multiple arbitrage and platform investment.
STEP 03 OF 10
Deavo's own 2026 market commentary names a large cohort of owners reaching retirement age, continued CSBFP and vendor-take-back use, and more buyers browsing listings online before contacting a broker as the forces keeping deal flow moving — and it names interest rates as a factor affecting how much debt a buyer can serviceably carry. None of this is a market multiple, and the source is explicit that it should not be read as one. See 2026 SME M&A outlook.
STEP 04 OF 10
The Employee Ownership Trust deduction under ITA s. 110.61(1) applies only to a qualifying business transfer that occurs after 2023 and before 2027, capped at $10,000,000 in eligible capital gains. The parallel worker co-operative conversion route in s. 110.62 runs on the identical after-2023-and-before-2027 window. If either structure is genuinely on the table for a founder-led platform, the calendar — not the market — sets the deadline.
Neither route is available where the subject corporation is a professional corporation, and both require specific pre-transfer ownership and active-business tests to already be satisfied before the transfer date. This is a fit question as much as a timing one, and it should be resolved well before the 2026 window closes, not inside it.
STEP 05 OF 10
Where an individual shareholder — a founder still holding equity, or a sponsor principal on an independent-sponsor deal — is part of the selling group, confirm their shares still qualify under ITA s. 110.6 before the process launches, not during it. The $625,000 statutory figure indexes annually for taxation years beginning after 2025 under s. 117.1(2)(c); confirm the current indexed figure with CRA rather than relying on a number carried forward from a prior year.
The $625,000 figure is stated against taxable capital gain, not the gross gain — under ITA s. 38(a) a taxable capital gain is one-half of the capital gain, so the statutory amount corresponds to a gross gain of $1,250,000 at that inclusion rate. Getting this arithmetic wrong at the modelling stage overstates the after-tax proceeds an individual seller can actually expect, which distorts the hold/sell comparison for that shareholder specifically.
STEP 06 OF 10
A platform that would need six to twelve months of owner-dependence and financial clean-up work before a credible process could launch is not actually ready to sell today, whatever the timing otherwise favours. See reducing owner dependence before you sell and cleaning up the books before a sale process for what that work actually involves before assuming it is a light lift.
STEP 07 OF 10
Concentration risk that is stable or improving supports a hold; concentration that is worsening is a reason to consider selling into the current number rather than waiting for a worse one to show up in next year's diligence. This is one of the few genuinely time-sensitive inputs into the decision — concentration trends do not wait for a convenient exit window.
Customer and supplier concentration is also named directly as a factor that shows up in a buyer's offer terms rather than in the headline price — typically as earn-out or holdback structure rather than a straight discount. A hold period spent diversifying the customer base changes the deal structure a later buyer is willing to offer, not just the number they will pay. See purchase price true-up for one mechanism buyers use to price this exact risk without walking away from the deal.
STEP 08 OF 10
If the platform itself was acquired partly on deferred terms, the reserve mechanics under ITA s. 40(1)(a)(iii) cap the spread at five years for an ordinary arm's-length sale, extending to ten years only for a small set of routes — a disposition to a child, an EOT, or a qualifying intergenerational transfer under s. 84.1(2.31)/(2.32). Know when the existing reserve fully unwinds; a platform sale that lands mid-reserve creates a second, separate tax-timing question layered on top of the first.
STEP 09 OF 10
A genuine reason to sell now is specific: the fund's remaining life no longer supports the hold period a further growth thesis would require, a key customer relationship is concentrating rather than diversifying, or the platform has exhausted its accretive add-on pipeline. A vague reason — 'the market feels good' — is not a data point, because no data point exists to test it against.
STEP 10 OF 10
Whichever way the decision lands, write the thesis down with the specific inputs that drove it, dated. A hold decision revisited in eighteen months against a documented thesis is a much faster review than one reconstructed from memory, and a sell decision documented this way gives the process team a clear mandate on what not to renegotiate away.
Anchoring the decision to a market multiple that no source actually publishes. No Canadian source publishes a current SME market multiple. Deavo's per-sector figures are explicitly illustrative ranges, not a market index, and its own outlook piece says so directly.
Assuming an EOT structure is available for any platform that wants to use it. The EOT and worker co-op routes exclude professional corporations entirely and require specific ownership and active-business tests to already be met before the transfer. Confirm fit well before the 2027 window closes.
Treating owner-dependence and financial clean-up as a light pre-process task. A platform that still needs six to twelve months of readiness work is not ready to sell today, regardless of how favourable the timing otherwise looks.
Confusing organic EBITDA growth with multiple expansion in the hold case. The worked example below shows a hold thesis built entirely on EBITDA growth, with no assumed change in multiple. Conflating the two overstates what a hold decision is actually banking on.
Scenario, illustrative only — the multiple is a drafting choice, not a benchmark. A fund acquired a platform three years ago at a 4.0× multiple of EBITDA, when EBITDA was $2,000,000: acquisition value = $2,000,000 × 4.0 = $8,000,000. EBITDA has since grown to $3,200,000 through organic execution, with no acquisitions. Applying the identical 4.0× multiple today: $3,200,000 × 4.0 = $12,800,000 — a $4,800,000 increase in value with zero assumed multiple expansion. The entire hold case rests on EBITDA growth continuing at a similar rate; if it does not, the arithmetic above is the ceiling on what holding longer actually bought.
No single answer exists across mandates. A fund's own vintage, remaining term and the specific thesis underwritten at acquisition are the inputs that actually decide it, not a rule of thumb.
The structure requires the trust to acquire control from a taxpayer and imposes tests that assume an owner-operator profile — it fits a founder-led exit far more naturally than a typical fund-level LBO exit. Confirm fit early rather than assuming the window is relevant. See estate freeze for a related, more commonly used succession structure.
That is a fund-structuring question — a continuation vehicle or secondary sale of a fund interest is one mechanism funds use to address it, distinct from selling the underlying platform itself.
It changes what a buyer can serviceably finance, which affects achievable pricing even without a change in headline multiples — deavo names this directly as a live factor in current deal flow, without quantifying it.
Only indirectly — through advisor and market attention. A structure with a hard statutory deadline tends to concentrate deal activity as the deadline approaches, which can affect buyer and advisor availability even for a platform not using the structure itself.
A 30-minute call works through the fund-level and statutory-window inputs together.
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