We buy, build, and hold exceptional Western Canadian businesses. Forever.
When we need additional capital, we issue subordinated preferred securities paying a fixed quarterly coupon. Available to accredited investors and to close friends, family and business associates.
Portfolio at a Glance
Bridging the Business Succession Gap
In its January 2023 Succession Tsunami report, the Canadian Federation of Independent Business found that 76% of Canadian small business owners plan to exit their businesses within ten years, putting more than $2 trillion of business assets in play. Only 9% have a formal, written succession plan. Nearly half have no plan at all. The result is an overwhelming supply of sellers relative to the number of qualified buyers in an inefficient private market, and entry valuations well below what comparable quality trades for in the public markets.
Lab One Capital exists to be a permanent home for a portion of those businesses. We are not a private equity fund or a search fund. We acquire family-held companies in Western Canada, pair each one with a seasoned operator who steps into the seat, and hold them indefinitely.
Investing with Lab One Capital
Public market investors have spent the last several years absorbing volatility that has little to do with the underlying performance of the businesses they own. We think there is a better trade available further down market.
The businesses we buy are small, established, and unglamorous. They change hands at multiples well below public comparables, not because they are lower quality, but because very few buyers are willing and able to operate them. That gap is the source of the return, and we share it with our investors through a fixed coupon rather than asking them to underwrite equity risk alongside us.
In exchange, investors accept illiquidity. These are multi-year holdings with no public market and no maturity date. We think that is a fair trade, and we price it accordingly. Current series terms are set out in the certificate and subscription agreement, provided on request.
Why Investors Participate
Investors who participate in these securities are typically looking for the following:
Priced Off Private Markets
We buy established businesses at private market multiples, well below public comparables. Part of that spread comes to you as a fixed coupon.
Fixed and Predictable
A fixed rate for the life of the security, paid quarterly in cash. No participation, no performance fees, no surprises.
Operator-Led
Every company we buy is run by a hand-picked Operating Partner who invests alongside us and leads as CEO for ten years or more.
Old Economy Businesses
We do not buy start-ups or turnarounds. We buy companies that have solved the same problem profitably for decades.
Paid From Established Operations
Your coupon is serviced from businesses we already own and operate. The capital itself funds acquisitions, not working capital or day-to-day operations.
No Clock
We are not a fund. There is no five-year window forcing us to sell good businesses at the wrong time.
How the Coupon Is Covered
Interest on the preferred securities is paid from the cash our operating companies generate, not from asset sales or refinancing.
We measure coverage on a consistent basis: group normalized EBITDA, less senior debt and vendor note interest, adjusted for our ownership in each operating company, measured against the annual interest owing on the preferred securities. The same coverage and leverage tests are written into the security certificate as conditions on any distribution to our common shareholders.
Current figures are provided to prospective investors on request, following a mutual non-disclosure agreement.
Summary of Investment Terms
The certificate and subscription agreement govern in all cases. The following is a summary only.
The Security
Issuer
Instrument
Interest
Enhanced yield
Fees
Your Position
Ranking
Security
Ownership
Source of payment
Covenants
Practical Terms
Term
Liquidity
Minimum
Eligibility
Reporting
Lab One Capital is bootstrapped. We fund acquisitions from our own equity and from the cash our businesses generate, and we do not sell common equity in Lab One Capital or in our operating companies.
Preferred securities are the one exception. They sit in a defined place in our structure, between senior lenders and our common equity, and they let us move on acquisitions faster than retained earnings alone would allow. We issue them selectively, in series.
If you would like to be notified when a new series opens, get in touch.
Invest With Us
If you would like to review current series terms, get in touch. These securities are available to accredited investors and to those who qualify under the family, friends and business associates exemption under British Columbia securities laws. Nothing on this page is an offer to sell or a solicitation to buy a security. Any investment is made solely on the basis of the subscription agreement and security certificate.