What you need to know: • This series went on a brief hiatus through 2025 as takeouts of small-cap Canadian equities slowed down, however, things appear to be heating up again with a flurry of acquisitions happening over the last few months. • Our potential takeouts portfolio is up 96% since inception, representing 37% annualized and is up 24% in 2025, slightly lagging the resource-heavy TSX last yer. The portfolio successfully predicted four takeouts. • We review the biggest winners and losers in the portfolio and present a list of new ideas on our radar. How Have Things Progressed? Since our last note in January 2025, we saw a pause on acquisitions of Canadian small-caps for a number of months, before ramping up again in Q4. There were 24 takeouts in the space in 2025, compared to 31 in 2024. While valuations and fundamentals were both on the rise through mid-2025, we believe there is again a discount between the two for a number of stocks, providing an opportunity to strategic and financial buyers. Our takeouts portfolio posted solid performance, being up 24% in 2025 and 96% since inception (37% annualized), compared to the resource-heavy TSX, which was up 27% in 2025 and 62% since inception. Please refer to page two for a review of our performance and changes to the portfolio going forward. Do the New Acquisitions Fit Our Criteria? Looking at the new takeouts, we outline how they fit into our 6-part framework below. 1) Poor Stock Performance – The new cohort of 24 takeouts was down 24% on average compared to their previous ATH. We continue to view this as a leading indicator that a firm is a takeout candidate given that acquirors are looking for discounted prices. 2) Cheap vs. U.S. & International Peers – This continues to be a trend, more so compared against U.S. peers. TRUBAR was a good case study for this, selling for 2.2x 2025E compared to previous takeouts of U.S.-based CPG brands at >3.0x. 3) Profitable – 18 of the 24 firms were profitable on an EBITDA basis over the last twelve months. This was 9 out of 11 in the last cohort, implying that the low hanging fruit has already been acquired. Nevertheless, profitability remains a strong indicator, especially for private equity buyers. 4) Solid Growth & Tailwinds – On average, the newly acquired companies grew revenue by 6% over the LTM and were expected to grow revenue by 29% next year. 5) Market Cap Over $30M – 20 of the 24 takeouts occurred at a valuation of over $30M, with the average being $443M. We will reiterate that the $100-300M market cap range seems to be the sweet spot for takeouts. 6) Private Equity Friendly – Only 7 of the 24 acquisitions were made by private equity firms, a major decline from the past trends. This can align with the expanding valuations through mid-2025, but we believe PE firms will become active again in 2026 as valuations are modest again in our view and PE dry powder remains historically high.