Here at Q1 we gather Canadian Technology M&A data and publish the results of our research on a quarterly basis. All information included in the reports are sourced from primary research and data analysis. This report focuses on Canadian M&A statistics, trends, geography breakdown and more.Quarterly_M&A_Report_2018_Q2_2018_07_06_Bhimani-Afif
Canadian Technology M&A Highlights
- Healthy activity for H1 of 2018: First half of 2018 shows a healthy spur of activity with an aggregate deal volume of 159 transactions, highest H1 activity in last 8 years.
- Dollar value relatively low: Although H1 showed more activity than the past, the total transaction value of disclosed deals is only $ US 4B, lower than 2017’s $ US 5.7B and 2015’s historical high of $US 9.3B. This indicates we are seeing smaller deal sizes than the past.
- Mega transaction dominates: Q1’s lackluster performance is boosted by Q2’s mega transaction – the acquisition of VeriFone by Francisco Partners and BCI, valued at $US 3.2B. This makes up over 90% of the transaction value for Q2 alone and 77% of the total transaction value for H1 2018 2018. Median transaction size for Q2 is $US 8M, which is lower than Q2 2017, $ US 13M.
As we can see from the deal size breakdown, the majority of Q2 2017 transactions were between $US 10M – 100M, whereas the majority of Q2 2018 and Q1 2018 transactions were smaller than $US 10M.
- Historical high of undisclosed deals: Historically, about 70% of transactions that take place in the Canadian Technology M&A space have no dollar value attached to them. In H1 of 2018, 77% of the transactions did not disclose values. This is the highest percentage we’ve seen in the past 10 years. Total transaction value is, of course, understated, especially for H1 of 2018 since only 23% of the transactions had values attached to them.
This again illustrates the difficulty of working in the Canadian Tech M&A space, where most of the transactions have little information to work with. Transactions with disclosed valuation and multiples tend to be bigger and do not reflect the true nature of valuation of the sector as a whole.
- Geography breakdown of acquisitions: We are seeing an increase in the amount of pure domestic transactions (we define this as a Canadian entity acquiring another Canadian entity). In H1 of 2018, 31% of transactions were pure domestic, compared to 22% and 26% in 2017 and 2016, respectively. In addition to this, we are also seeing a decrease in foreign entities acquiring domestic entities. 32% of transactions were of foreign acquirer in H1 2018, compared to 41% and 38% in 2017 and 2016, respectively.
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