Rym Leulmi is an entrepreneur looking to acquire a defence technology company.Adil Boukind/The Globe and Mail
Rym Leulmi is considering moving herself and her two young children from Montreal to rural Nova Scotia to run a defence technology company.
The electrical engineer, with an MBA, a master’s degree in nanotechnology and 15 years of experience in management roles, may not have worked in this specific field, but she knows an opportunity when she sees one.
That opportunity is a roughly 60-year-old business owner who’s ready to retire, with no succession plan and a business that’s on track to benefit from the federal government’s massive uptick in defence spending.
So, Ms. Leulmi is on a mission to acquire it, fulfilling her own dream of being a business owner and, inadvertently, helping Ottawa achieve its goals of building out a sovereign supply chain.
“I’m really excited about it, but it’s a roller coaster,” she said.
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Ms. Leulmi is not alone. She’s one of several acquisition-minded Canadian investors and entrepreneurs combing through the country’s established businesses, some facing succession questions, to find the makers key to helping Ottawa pull off its ambition to establish a homegrown defence supply chain.
These businesses are the parts and components makers, the small- to medium-sized businesses who make the tread that goes on a tank, for example, or the sensors that are used to detect underwater activity. They build the essential parts that make up the larger whole, feeding into the supply chain rather than creating it.
Ian Whytock, managing partner at Tidal Venture Partners and co-founder of Vimy Forge, an accelerator for Canadian defence companies, calls these companies the “missing middle.”
“There’s a lot of emphasis and interest being placed on defence innovation and the opportunities within defence innovation, and rightly so,” he said.
“But I feel like we’ve almost over indexed, and we’ve forgotten about Canada’s defence suppliers.”
The federal government, as well as several industry organizations, are doing their best to map the sector and paint a picture of which companies exist and the roles they play, given Ottawa’s goal to spend 5 per cent of Canada’s gross domestic product on defence by 2035 in line with NATO targets.
However, what they haven’t captured through this data collection is how many of those companies are about to face succession or transition challenges, Mr. Whytock said. “Many of them are owner operators who are in their 60s or 70s and do not have a succession plan on that business, and I actually think that’s a national security crisis.”
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About 61 per cent of small- and medium-sized businesses, or SMBs, are led by owners aged 50 and up, and nearly one in five plan to exit within five years, according to a 2026 survey by the Business Development Bank of Canada. At the same time, more than 90 per cent of the Canadian defence industry is made up of SMBs, according to a report by Innovation, Science and Economic Development Canada and the Canadian Association of Defence and Security Industries based on data collected in 2024.
These are the figures attracting private equity investors and entrepreneurs to businesses valued between $5-million and $50-million with defence sector potential, said Raphael Amram, a partner at Osler, Hoskin & Harcourt LLP.
They’re not necessarily the biggest or most exciting businesses. They’re often relatively unknown, located in rural areas and don’t sell directly to the government. Yet, their role in the supply chain is unmistakable and it’s growing in importance as Canada looks to become less reliant on the United States.
“And if they’re left to be ignored or they’re purchased by foreigners, then all of a sudden we have a very vulnerable part of our supply chain related to national security concerns being unattended,” Mr. Amram said.
Plus, there are likely even more SMBs with parts that are useful to the growing defence industry, such as commercial aviation or automotive companies, who haven’t even considered selling into it yet, said Ugo Dionne, an entrepreneur and president of the M&A Club Canada.
“But with people getting a little older running these businesses, I’m not sure they’re going to want to take the risk to pivot and start serving the defence industry. So, there’s a huge opportunity for searchers to acquire businesses that have that potential,” he said.
That’s what Ms. Leulmi is – a “searcher.” It’s a term used to describe people who are pursuing entrepreneurship-through-acquisition, a method through which people can come to run their own businesses without necessarily having to start from scratch as a founder.
For example, to help with her entrepreneurship journey, Ms. Leulmi raised an approximately $700,000 fund from 13 investors to cover the costs of her search. When she finds the right business, her investors have already committed capital to contribute to an acquisition, allowing her to buy a business valued between around $20-million and $55-million.
She didn’t necessarily set out to buy a defence business but given one of her criteria is the company must be in a growing industry, the sector was a natural fit.
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Defence is an attractive market for a lot of searchers right now, said Sévrine Labelle, managing director of the Business Development Bank of Canada’s Thrive Entrepreneurship Through Acquisition Fund.
For many of these companies with owners nearing retirement, the right searcher could be key for tapping into new opportunities at home and abroad.
“They can become an amazing new owner for these businesses, driving the energy, the innovation and the growth for the years to come, and especially now with all the investments that have been announced by the Canadian government,” Ms. Labelle said.
Plus, the implications of what happens to a business if it’s not acquired by the right person – or acquired at all – are strategically significant, said Peter Dawe, senior vice-president of defence strategy at BDC.
These companies have valuable certifications, security clearances and supplier relationships that so many newer companies are scrambling to secure, Mr. Dawe said. “Trust in the defence sector is particularly important and that’s really difficult to replicate.”
He added, “When you lose one of these companies, or if one of these companies doesn’t have an appropriately mapped out succession plan, then you effectively lose the company from that supply chain, and the implications of that in defence can be significant.”