Why We Buy "Broken" Companies
PE sees tech risk. VCs see services drag. We buy profitable companies they miss. Inside Backer North's 2026 "Stranded Asset" strategy.
There is a glitch in the Canadian market.
If you look closely at the lower-middle market, you will find a specific type of company that no one buys. These companies are profitable. They have operated for decades. They have blue-chip clients.
And they have built their own software.
This software should make them valuable. Instead, it makes them unsellable.
They become "Stranded Assets". They are stuck in a valuation dead zone because they confuse the two standard types of buyers.
Private Equity looks at them and sees "tech risk." They don't know if the code will scale, so they refuse to pay for it. Venture Capital looks at them and sees "services drag." They don't want to hire people, so they pass.
The market sees a broken deal. We see trapped value.
The problem isn't the asset. The problem is the buyer's map. The map says you must be a service firm or a software firm. You cannot be both.
Our strategy for 2026 is to ignore the map.
We call it the "Partnership Path". It is a simple mechanism to release that trapped value. We don't just sign a check and hope. We embed ourselves inside the company before we buy it. We validate the code. We fix the books.
By the time money changes hands, the risk is gone.
We saw this dynamic clearly in a recent pipeline opportunity we call "Project Mosaic". Where the market saw a traditional agency, we saw a tech platform waiting to be unleashed. The value is there. It just needs the right key to unlock it.
Most investors want simple bets. But the outsized returns are hidden in the complex ones.
Are you a capital provider or intermediary who sees what we see? Let’s connect.
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