Anne-Marie:
Hello and welcome to a very special episode of "Accounting for the Future." I'm your host, Anne-Marie Henson. And as you can see today, I do not have a guest. What we're gonna be doing in our last episode of 2025 is to reflect on some of the really fantastic conversations we had this year, all of them centered on, like, one major theme, and it's how businesses and those that lead them navigated significant uncertainty throughout 2025. I've had the opportunity to connect with a wonderful group of guests to explore the challenges and the opportunities that are being faced by Canadian businesses today. And so in the episode, what we wanna do is revisit some of those key topics and themes and highlight the moments that we think best captured how organizations are adapting and evolving in real-time. So whether you're a business leader, you sit on a board of directors, or you're leading a team through change, this episode is packed with practical wisdom and forward-looking ideas to help you not only tackle the year to come, but to lead through it. So let's dive in.
I wanted to start with one of this year's biggest topics. It's how the uncertainty in public markets has been reshaping investment strategies. You're gonna be hearing from Sunil Sharma, BDO's national leader for transaction services and private equity, on how private equity firms are closing valuation gaps by targeting public companies for take-private deals. Now, this episode was reported fairly early on in the year, and there have been some changes. We've seen a little bit of a pickup in go public transactions these days, but we still think that take-privates by private equity firms especially is gonna continue to really be prevalent in the years to come.
Although 2025 so far has been, I think, a difficult time for the public markets and IPOs in general, it always provides an opportunity. And I know I read your bio at the beginning, but one thing that I didn't mention was, in addition to all these things that you do on a day-to-day basis, you're also BDO's national private equity leader and have been for the past couple of years now. So it seems like this market could be a great opportunity for private equity in this space. And I wanted to ask your thoughts on how they're approaching the market currently. So are they actively seeking public companies, perhaps right now at a valuation that could be really attractive to them to take them private? Or do you think there are strategic players that are maybe playing a bigger role in this space?
Sunil:
Yeah, I mean, I think both. I mean, certainly from a private equity lens, and almost 50% of deals valued at 5 billion or more in North America were public-to-private deals. And so, you know, I think private equity funds are often looking at the public markets for opportunities. And I think that's also partially driven by, let's say, inefficiencies or misalignment in the private markets. So you are seeing, you know, a valuation gap between seller and buyer in private companies. And despite of, you know, a lot of the, you know, demographic trends around wealth transfer and baby boomers retiring, you know, that gap from a valuation perspective still exists and is making it more difficult to get deals done. Certainly making it more difficult in the environment that we're in currently, where, you know, effectively sellers, you know, at the moment, don't want to accept a concession on price around, you know, any tariff risk, and want the buyer to, you know, kind of bear that risk. And for obvious reasons, you know, they're uncomfortable with that.
And so, you know, as a result of some of the inefficiencies and challenges we're seeing in the private markets. And you know, there continues to be a record amount of dry powder out there, you know, private equity funds are increasingly looking to the public markets to, you know, look for undervalued assets and CE assets where they can make an impact and then look to take them private. And, you know, we had, you know, several in Canada over the last, you know, 12, 15 months. Parkland Corporation was taken private by Birch Hill. Fairfax took Sleep Country private. MDF commerce was taken private by KKR. So there's, you know, at least a handful or a dozen of take-privates that have happened with Canadian public companies. And I could see that trend continuing to exist you know, in the next little while as, you know, there's opportunity amongst the public markets.
Anne-Marie:
So this year has certainly demonstrated that resiliency is more than just a buzzword. It's become a necessity for businesses. In this next clip, BDO Canada's advisory services partner, Jesus Ballesteros, and his senior manager, Charlotte Zhen, share how businesses are staying strong and they're thriving by leaning into strategic planning that helps to keep teams aligned.
When it comes to unlocking this value, I know that you and your team consider a lot of different factors, right, the economy being one of them, politics, I guess the advancement of technology and innovation. How has the current environment impacted Canadian businesses specifically and their ability to be able to drive value and realize this growth and profitability that we're all looking for?
Jesus:
Yes, that's a good question, Anne-Marie. And 'cause frankly, the world has changed a lot over the past several years, hasn't it? The context is very important for everything that we do. And I think it's fair to say that since the 2008 crisis, the world has changed in many ways. We had, for example, the first Trump administration, which introduced this concept of using tariffs. And that certainly impacted Canada the first time around before it started impacting Canada this time around. And then, of course, we had the pandemic. And that threw a wrench into a lot of things that really upset the normal course of business.
So we have certainly been operating in a more uncertain world in many ways, and it's very important to acknowledge that every time we go in and try and help a company to think about their strategy, to understand where and how they may be making money and may find opportunities to make more profits, because it really comes down to making sure that what companies are doing is fit for purpose and is fitting for this context, right? So we definitely look at all these variables when we analyze a company's performance and provide our advice to be able to cope with these circumstances the best way possible as much as we can, right, given that uncertainty is becoming just more the norm in how companies operate, right?
Charlotte:
Yeah, definitely. To add onto that, over the last four years, as Jesus mentioned, we've just operated an environment of ongoing uncertainty where there are unexpected disruptions that continue to challenge businesses all the time. And in these times, I think it's really critical to ensure that your organization has strategic clarity. And what I mean by that is that your employees have a common understanding of the organization's goals, its core customers and value proposition to each of those customer groups and key priorities. And what this does is that it provides organizations with a framework in which to make decisions when the external environment shifts, as it consistently is these days. And it provides that clear decision-making criteria that all employees can really consider on a day-to-day basis as they go about their day-to-day tasks.
But meanwhile, it's really important to remain flexible and agile and having performance measurement and forecasting tools, for example, are critical to helping businesses quickly identify when something is not going according to plan and adapt accordingly. And number two, assess the scale of the impact at a point in time and over the longer term. And last but not least, I think cross-functional collaboration and clear communication are also really fundamental to adapting to any unexpected change. So having the right systems in place to be able to do that is really important as well.
Anne-Marie:
Those were some great insights. Our next clip highlights an incredible conversation I had with the vice president of McMillan Vantage, Jonathan Kalles, earlier this year. In this clip, we speak about the shift in interprovincial trade barrier legislation and how reaching out to local policymakers may be a game-changer for finance leaders during this transitional period. Let's listen.
So Jono, what advice would you give? You know, a lot of our listeners and our viewers are in the finance function, so they could be CFOs. What could you provide to them if they want to best position their organization in light of all these changes?
Jonathan:
So I mean, we're doing a lot of that in my firm at McMillan Vantage as a public affairs firm doing GR, we're working with our clients to strategize where to do the outreach. Again, we've said at the provincial level, which is where there's a lot of work that's left to be done. At the federal level as well, and as I said right off the top, you know, this isn't a snap your fingers, it's come into effect. We have to wait and see what the regulations are to this bill at C-5. So there's still work to be done at that level. And that means engaging with minister's offices, finance ministers, ministers of economy, whoever is in each province is probably a little different. But whoever is managing the file of internal trade, I would say that 5, 10 years ago, that didn't exist as sort of a position in different governments. But clearly to show the priority that's been given, there are ministers in each province, in each territory, and certainly federally that either have that in their job title or at least have that as part of their responsibilities.
It could also mean working with the local member of parliament or the local member of the legislature where your office is located, or your head office, or where you have the most employees, 'cause these are the people who are gonna be impacted the most. And so that's where you're gonna have leverage when you go talk to elected officials, senior officials in departments, it's making the case of why something makes a lot of sense, or why there should be a little bit of a tweak, or why a little nuance is required, why something should be included, why it should not, and where there needs to be, again, certain exceptions or exclusions, I don't think anybody is gonna be eager to have tons of them, but you know, like I said, when it came to Quebec, Quebec's not doing away with its language laws. So clearly, each province is still gonna keep some, the point here is to minimize them. And I would say when you're engaging either with your internal, you know, experts on government relations, with your consultants that do your GR, your goal here is to make this a win-win where both federal government and the provincial government you're engaging with see that you're trying to work to improve the situation, that you're coming with solutions, not just don't do this, don't do that. A more positive approach is going to be more well-received. And that would be my sort of overall strategy. You're trying to be a constructive partner and you're not trying to be a naysayer. That's generally, I wouldn't say always guaranteed success, but you're less likely to have success if you simply say no without coming up with an alternative or why something is really egregious and that, you know, secondary effects sometimes aren't taken into consideration. You will find, and I think people who work in the business world, who don't engage regularly with government, know that government doesn't always understand how business works, how the business world works. And so it helps to explain to them what those sort of secondary consequences may be.
I think really that's the goal, is to try to come with solutions. And like I said, this is the opportune moment. Right now, this is when they're working on, coming up with the solutions, implementing them, and they need guidance in terms of how this will impact day-to-day operations of companies across the country.
Anne-Marie:
Now I'd like to turn our attention to the boardroom where decisions can carry significant weight and where foresight is really essential. So first, I speak with BDO Canada board members, Anthony Marinelli and Janet Boyle, our independent board rep member, about the importance of staying current in the face of regulatory changes and emerging risks. And then we turn to Simon Hutton, BDO Canada's national sustainability leader, to explore how CFOs and boards are adapting in areas like sustainability, valuation and compliance.
All these changes that are happening in the world, right? You look at, you know, the news every day and you see a lot of geopolitical uncertainty, questions, uncertainty around tariffs, about climate change, about cybersecurity risks, right? All things that are seemingly changing every single day. So how do you as board members stay agile, stay on top of these issues and make sure that you're asking yourselves, you know, how this could impact the company, the organization that you're on the board of?
Janet:
You know, first off, I think as board members, you really need to make sure that you're staying well-informed. I mean, it's a core responsibility, in my view, that you are current and up-to-date on trends. So as things are evolving, either as a self-learner or as part of your own business, you need to make sure that you're investing time and understanding some of these critical issues that really impact all types of firms, all sizes of organizations. So that's one in terms of really investing in a broad understanding of, you know, what's happening in the market, the landscape. I think the second thing is, as a board, you need to build into your agendas, flexibility for these types of evolving issues.
So I think, you know, a great recent example would be tariffs. You know, I think in, you know, at the start of this year, this was sort of something that was in the very outer reaches of, you know, commentary that was made and then suddenly it was implemented very quickly. If you don't have flexibility built into your board process and your board agendas to be able to table these topics, you're not able to give them the sufficient time that's required. So that's really important in terms of time and flexibility. And then the last thing I would just talk about, when we think about agility, you know, agility sometimes is confused with a quick response, right? In fact, you know, as a board, when you think about agility, it's more around, you know, have you built a culture at the board level of being able to respond to things in a thoughtful way, in a timely way that will allow pivoting? So that doesn't necessarily mean we've gotta make a quick decision, 'cause sometimes quick decisions mean I haven't really thought this through or I haven't contemplated necessarily the risks. I think agility is around building that board that says, you know, we have the mechanisms and the opportunity to be able to make these pivots address these emerging issues. So we've got a framework and a process to be able to do that.
Anne-Marie:
That's such a great takeaway that, you know, agility does not necessarily mean speed all the time. So that's really, really important for us to, I think, remember, and it's funny, you mentioned that making time for important changes. I sit on a couple of boards of nonprofit organizations and we have two-hour board meetings which are typically packed. You know, the agendas are full and we often go over, and there was a recent situation where the organization unfortunately lost essentially all of its provincial funding, which was a very significant issue. And we had to schedule a second meeting, because we weren't able to make time for it in the agenda. Whereas that was probably the most important issue at that time. So I totally agree with the importance of making sure that you keep some space in that to make changes when needed so that you can talk about the most important issues at that time.
Anthony:
When I think back to when I started on the BDO board six years ago, when you think about the issues that we were dealing with then versus what we're dealing with today, it's changed significantly and quickly. And I think one other important thing, Janet mentioned this, but I just wanna reiterate it, is the learning and development of board members and the responsibility they have to get trainings, to stay up-to-date. And it's not sometimes not as simple as just reading a newspaper article, it's actually taking courses at whether it's ICD or other organizations to get up-to-date with the things that are important in the current environment. So I do think that's an important message for all board members, that this is their responsibility to that for their stakeholders and for their fiduciary duties.
Anne-Marie:
Yeah, that's very important to remember for sure. There is a recognition, I think, with the new regulations that are making it a must have, not a nice to have, around sustainability. And especially what you said before about the measurement and the reporting and the data behind it.
Simon:
Yes.
Anne-Marie:
So why should CFOs and boards with all of the other challenges and priorities that they might have on their plate, why should they care about sustainability data today?
Simon:
Yes, yeah, yeah, strong question. So I'd say these days, right, and this historically hasn't always been true. 20 years ago, this probably wasn't true, but these days, sustainability is a financial management and valuation issue. And as a result, this is a important thing for the CFOs of the world to take stock of. There was a major study done just two years ago, an empirical study that looked at valuations. And this study showed that top performers on matters of ESG and sustainability versus the median performers, one of valuation increase of between 4 to 19% higher. So from a valuation perspective, this is really, really powerful. Even if you take the low range at 4% and then you cut it in half and say it's only 2%, for valuation to be increased by that magnitude, by doing better on matters of sustainability is very telling in terms of how the market is rewarding folks that do better on sustainability.
There's also a lot of risk on the opposite side of the spectrum. There is a lot of risk to manage these days for CFOs, right? And if we just think about some of the things that we've spoken about today and some of the potential financial penalties that can manifest in the Canadian context, right? And so when we think about Bill S-211 and the Modern Slavery Act, penalties for getting that wrong are up to a quarter million dollars. In the case of the anti-greenwashing regulations and the changes to the Competitions Act, the penalties of getting it wrong, there are up to $10 million for the first offense and then they increase in magnitude. And so these are potentially serious penalties, right? And so there's a lot of reasons for CFOs to take stock of these things and to take stock of the data that's gonna help elevate valuation, for instance, but also manage and mitigate the risks that we're all currently facing in the Canadian business community. I'd say over and above those things, over and above those things, we have a ton of evidence now that tells us that major customers are asking for hard numbers, right? They want evidence of doing better. This is showing up in RFPs, it's showing up in due diligence. And so having strong data keeps opportunities moving and really does create more space to differentiate in a very competitive environment, okay? And so there's a few things at stake here, all of which are important and ought to be top of mind for CFOs across the economy.
I think at the end of the day, right, strong sustainability data creates value, it can protect value, and it can build transparency that can inform smarter decision-making and create numerous benefits in the business, again, both from a value creation point of view and also from a value protection point of view, a risk management point of view.
Anne-Marie:
Now, let's shift to a conversation I had earlier this year with Shilpa Mishra, former partner at BDO Canada, and Alyssa Barry, president of Alliance Advisors. Here we look at how more women are taking on influential roles on boards and in deal-making, shaping the future of sustainability and governance from the inside out.
Alyssa, I wanna ask you about something in particular. It's top of mind for me pretty often. You know, Shilpa mentioned, there has been an improvement in the number of women C-suite executives that we see. It's certainly yet at 12% not representative of the population. And I'd assume it's quite similar at the board level still, right? There are more women, there are more minorities that are sitting on boards. But when you're looking at this, and it's not just a tick the box sort of DEI initiative. This is about representing your stakeholders better, your customers better, right? Having that more diverse view around the table to make strategic decisions. So could you talk a bit about what changes you've seen in the past couple of years and maybe what you expect to see in the next couple of years?
Alyssa:
Yeah, absolutely, this is a really important topic. We're starting to see that movement away from tokenism and seeing that shift towards women in the boardroom playing critical roles in decision-making, which is really great to see. At Alliance Advisors, we have a team that really focuses on ESG, but particularly on the governance side, where we're talking to institutional investors such as BlackRock and State Street, and they're still vocalizing the importance of gender diversity in the boardroom, which is critically important. We're also starting to see, I think Shilpa, you referred to this as well, more women as part of the deal-making process. So where I believe that we're actually gonna see an active change towards more women in the boardroom is women becoming investors. Those that see the opportunity to write the checks and be a part of the deal-making, I believe that that's gonna actively lead to more women in the boardrooms over time as well. And I'm proud to say I have my first corporate board for a publicly traded company which I'm very excited about.
But it's come with over time, really getting more comfortable with being a part of the building of companies, getting involved at the ground level and not waiting for someone to knock on my door, and getting out there networking and really positioning myself and my value proposition in that process. And you know, I was fortunate enough to find an opportunity where they saw value in my skillsets, but being able to build something right from the foundation and to be able to be an investor as well. So I think that's a trend that I hope we see continue.
Anne-Marie:
That's amazing. Congrats, by the way, that's a really great thing.
Let's move on to what I thought was a really interesting conversation with Dr. Keith Keating, BDO Canada's chief learning and development officer. We talked about how learning and development has become a key driver of resilience and growth in organizations. In this clip, you'll hear how L&D is evolving from a cost center into a strategic engine that fuels performance and helps businesses keep up with constant change.
You talked about something in your response there that actually leads well into my second question. So you know, this podcast is about accounting for the future. A lot of our listeners are in the finance function, you know, either as auditors or CFOs. And like the finance function, oftentimes I find, L&D has been viewed as a cost center to your point, right? It's not something that's viewed as being revenue generating or adding significant value. It's like a fundamental, it's necessary evil to have in organization. What's your perspective on this and how would you say that this has evolved over time?
Keith:
So there's two phrases that you used I wanna pick up on. So the first is support function. And I think this gets misunderstood, or worse, we get dismissed. And not just us, but finance, IT, marketing. When we're called a support function, it tends to lead this idea that we are secondary or that we're less strategic. But if you unpack what a support function means, well, it exists to enable the business. We support the business. And so in the case of learning, we support the single most important resource in any organization. It's people. We're not supporting the business, we're supporting the people who drive the business. The people who innovate, who serve clients, who manage risks, who lead teams, who adapt to change, who deliver results, who do all of these things that make a business successful. And so if we step back, it's not a side role, it's central to the organization's success. So I personally am not offended by support function. I get offended when people think that that means you're something secondary when I think that we're actually a driver.
So the second phrase that you used, that I had also used, is cost center. So if we flip the language from support function to cost center, that's where things get even more trickier, because on paper, it's easy to categorize L&D as a cost, because we don't sell a product typically, we don't book revenue. But when a learning function is operating at its best, it's not a cost, it's a catalyst. A strong L&D function helps to reduce turnover, increase productivity, close skill gaps, build future leaders, improve customer experience. I could go on and on and on. And these aren't soft outcomes, these are tangible business outcomes. And so to go back to your original question, I think the mindset is starting to shift slowly but surely. You know, BDO is a great example. This role didn't exist before. I would say the function that existed here before was largely in an order taking capacity, whereas now we're seeing an evolution where we not only have a seat at the table, but we are building our table, we're inviting executives to come and sit with us. We're developing a learning culture. And so leaders are starting to recognize in general that learning isn't just a perk, it's a performance lever, it's a retention strategy. It's a competitive advantage when we're filled with such significant change that's going to be happening and continue to happen in our industry and all the industries.
So I'll wrap it up and just say, I'll proudly say that learning is a support function. Because what we support is the engine of the business, it's the people. And when you invest in people, the return isn't just financial, it's cultural, it's strategic, and it's enduring for, what I call and what most leaders should be calling, the most important resource being the people.
Anne-Marie:
Finally, our last segment looks ahead to 2026 and two big forces that are shaping the future, AI and cybersecurity. In our first clip, I speak with Paul Dostaler, technology partner at BDO Canada, about how generative AI is helping companies unlock value. And the second clip, BDO Canada's cybersecurity partner, Rob Philpotts, talks about growing risks like ransomware and nation state attacks.
So let's talk about a business that, you know, approaches you and wants to adopt or even scale AI, they might be using it a little bit, but they don't feel like they're really maximizing the value they're getting out of it. What considerations would you say they need to take into account?
Paul:
Yeah, I think it's important to look at the business as a whole, right? So we've been, you know, trained over the years to look at kind of classic use cases for AI and again, the predictive capabilities of AI. But now with the advent of generative AI, again, it's applicable throughout the business. So look holistically at your business and think about the parts that are taking you the most time, and start thinking about what more sophistication around automation and generation might help speed up those workloads. So you know, we know that CEOs know that in order to be competitive with their business, they need to use generative AI to create those efficiencies and reduce those transactional workloads that can be accelerated through AI. So again, think about which parts of the business can be assisted by AI and then improve those efficiencies, realizing a little bit of ROI at a time and building upon it. The other consideration is that, you know, AI works on data. And so there's a high degree of centralization that's really needed to get the best out of AI. And so as you think about digitizing more and more of your business, try and reduce those silos to make sure that your corpus of data is well connected so that AI can draw insights from across the entire organization.
Anne-Marie:
Those are all really good piece of advice for sure and and really helpful for our listeners, I'm sure. And I wanna talk a little bit about manufacturing, again, specifically and how AI can be used, you know, in thinking through the pain points of that industry, is there a possibility to see it improve sort of the logistics, warehousing operations? And are there any examples that you can give of work that maybe we have done or you have witnessed in that space? And how does it tie, you know, I am a CPA by background, so I'm in a bit more knowledgeable about the financial reporting impact of things. Like how do you tie all the importance of warehousing and logistics and supply chain to better financial reporting?
Paul:
Good question, and you know, I have a view that, you know, essentially, everything that the business does is in support of clean and effective financial reporting. And so really good inputs create good outputs, and getting more insight into those inputs further, you know, create better results.
Anne-Marie:
You know, when I think of a lot of Canadian companies today, for example, manufacturing business, right? So I might think if I'm running that business today and I'm considered to be, you know, an SMB, small-medium business, my supply chain is all over the world, I'm bringing in materials and chemicals and industrials from all over the place. I'm not supplying the government. I'm not involved in defense, simply manufacturing parts for, let's say, automotive industry or something. Why would I be a target of cybersecurity risk, let's say, by these nation states? Like, why should I care so much about these risks?
Rob:
So that's a good question. So not every manufacturer out there is going to be the target of a nation state per se, because they also have limited resources and they need to sort of go after things that are important to them. And I'll get to that. However, all businesses are susceptible to what we call cyber gangs that operate typically ransomware networks. And the ransomware is, you know, they attack you, they hijack your data, and then they basically ask for money or else they'll dump all your data wide open onto the internet. So ransomware is a problem that faces all businesses, and it's what we call typically untargeted campaigns where they're just casting the widest net possible so they can exploit and get as much ransom as possible. Oftentimes, some ransomware actors are attributed as proxies to nation states, as in it's an approved kind of arms length activity that creates a bit of disruption and issues in the world. And one famous one of recent times was the Colonial gas, I believe that's the name, pipeline attack in the Southeastern United States. So that was a ransomware activity that shut down gasoline distribution in the US Southeast a few years ago. You know, to bring it back to your question as to what sort of small, medium businesses would likely be a target of a nation state. And I just wanna be clear, this doesn't mean you're automatically being targeted by nation states. It means you have to be more vigilant and resilient with your cybersecurity. So if you're into an area like complex manufacturing, and this is typically things like computer technology, software, aeronautics, electric vehicles, anything that's sort of cutting edge in this moment, there are certain nations that might take a strategic interest in that activity that you're undertaking. So if you're manufacturing something unique in the world or unique for your country or your industry that is advanced and technologically sensitive, like, let's say with patents or other trade secrets or intellectual property involved, that's something I would be more concerned about.
Anne-Marie:
What an incredible lineup of conversations. As this year comes to a close, we're really grateful for the insights and the stories from our guests, from leadership and planning to technology and transformation, 2025 showed us that the future is ours to shape together. If you like this or any other episodes from the year, make sure you leave a review or a comment. Thank you so much to our listeners who have tuned in throughout 2025 and in the years before for being part of these conversations and this growing community. I'm Anne-Marie Henson and this has been BDO's "Accounting for the Future." Wishing you all a really happy and healthy holiday and looking forward to 2026.