To Clients and Friends of StoneWood Group,
We hope that 2025 has been a good year for you personally and professionally.
Here at StoneWood Group, 2025 was surprisingly better than we predicted at this time last year. While we saw a drop off in tech sector hiring, we did stay busy helping our clients in industrial services, manufacturing, asset/wealth management and infrastructure consulting.
With all the tariff and trade talk directly impacting Canada, as well as the broader global geopolitical issues in the headlines, it’s challenging to remain optimistic as we head into 2026. However, as we dig a little deeper and reflect on what we gleaned from this past year, we do see some trends continuing into 2026.
Industrial Services & Manufacturing
A notable observation from this past year was the number of companies that undertook searches to replace retiring or aging leaders. While this has been building and was widely predicted over the past decade, it’s clear that many companies have not taken the appropriate steps to ensure that successors are ready to take the helm. This is particularly true in smaller, mid-market and owner operated businesses and many businesses are now faced with the urgent need to find replacements for those looking for the exit. Many owners we speak to continue to hold on despite wanting to slow down or step down. With no successors in place, many are faced with selling at an inopportune time with multiples having compressed and typical buyers of the past decade such as PE firms and strategic buyers waiting for multiples to fall further. We see this trend accelerating through 2026 and beyond.
With the never-ending unpredictability coming from the Trump administration and uncertainty with the ultimate fate of CUSMA in 2026, Canadian businesses and manufacturers in particular have placed a considerable emphasis on leaders that can navigate ambiguity and complexity. This has been further exacerbated with an increase in the cost of capital and eroding margins due to tariffs and elevated interest rates. What does this mean for senior leaders? Companies have a heightened need and are looking for leaders that can combine strategic insight with operational effectiveness. With ultra-low interest rates seemingly a thing of the past, financial engineering is no longer sufficient. Senior leaders will have to find ways to provide value through improved operational performance and productivity gains. While faster adoption of AI and automation in general should be part of the solution, discussions with our mid-market clients suggests that few companies have started and most aren’t sure where to begin.
Technology
With few exceptions, Canadian tech firms and their Canadian sponsors spent 2025 in a deep freeze with new funding sources largely drying up. 2025 saw a high concentration of capital in a few large deals and companies raising $50M or more accounted for 60% of the total VC dollars invested year to date, with Cohere and Clio being notable recipients. While final numbers aren’t in, indications from Q1 and Q2 suggest that 55%-60% of total investment dollars came from US VCs and PE firms, a concerning trend for the Canadian tech landscape given the hollowing out the Canadian tech sector by PE firms in the last decade.
Though the recruiting of functional leadership was flat in 2025, there was a marked uptick in CEO level recruiting. With rapidly changing market and technology landscapes, so-called ‘transformational’ leaders are in demand as firms seek to better align their businesses to these shifts or radically pivot. Again, where US investors were involved, those leaders were in most instances being recruited in the US.
With some studies estimating a 40% cost of living adjusted US wage premium combined with a deteriorating labour market in Canada’s technology sector, the flight of recent stem graduates to the US has been estimated to be between 30%-60% upon graduation depending upon the program. While some will return to Canada bringing valuable skills and experience desperately needed in Canada, many will not, adding to the dearth of experienced leaders to create the next Shopify. We see similar alarming trends among Canadian graduates in finance and health care.
Asset/Wealth Management
2025 was a busy year in the asset management industry with a number of notable acquisitions further consolidating the space. Burgundy Asset Management one of the few remaining independently owned asset managers was acquired by BMO, Richardson Wealth was acquired by iA Financial Corp and Guardian Capital Group sold to Desjardins Group. While arguments including, economies of scale, adoption of advanced technology, diversity of product offering, holistic financial and succession planning, talent acquisition and retention are carted out to justify these acquisitions, it remains to be seen whether clients are better served.
An undeniable trend is the greater focus on wealthier, more lucrative UHNW clients with more complex financial planning needs and an appetite for a broader range of private products, typically clients with a net worth of $50M+ and the ability to cut $10M+ cheques. This shift has brought an increase in demand for individuals with the gravitas, established relationships and access to this growing market segment. We have also observed an increase in turnover at well-established family offices and a greater demand for talent at newly established family offices as the well-heeled increasingly bring all or some asset management and administration in-house. We expect this to increase in 2026.
Talent Strategy, Search and AI
As we look ahead, we believe it is important to highlight several growing challenges related to talent strategy, AI, and executive search execution.
One noticeable shift we began to experience in 2025 is a change in how candidates present themselves to the market. The growing use of AI tools to craft resumes, cover letters, and prepare for interviews has raised questions around candidate authenticity and integrity. We find ourselves increasingly asking whether we are getting to know candidates as they truly are or an adjusted version to align with what they believe organizations want to see. We expect this dynamic to intensify in 2026 as tools like ChatGPT and similar platforms become even more widely adopted.
At the same time, organizations are facing new challenges in workforce and succession planning within an AI driven environment. Defining what “good” looks like in terms of competencies, skills, and leadership behaviours is becoming more complex as roles evolve and technology adds to traditional responsibilities. Many organizations are still working through how to identify, assess, and develop talent effectively in this new context. This will put a greater onus on organizations to ensure a more rigorous interview and screening process results in the best candidates being hired.