Myth Busters – Do Canadian Tech companies sell too early?

We always hear from numerous people the complaint that Canadian businesses sell too early especially when compared to their US counterparts. It’s an interesting notion that is always raised when a sale of a large Canadian tech company happens – BlueCat Networks’ recent $400m sale is a good example.

Rather than just relying on hearsay, we thought that it was worthy of us analyzing the numbers to see if it is true that Canadian firms sell too early.

So, if we look at technology companies that have been sold in Canada and the US over the last 5 years (2012 – 2016) and analyze the mean and median age at sale, we get the results in the chart below:

Pretty interesting set of results if you ask me! So in reality, over the last 5 years Canadian companies have on average either been older than their US peers at a sale (16.2 years vs 15.5 years) or when comparing medians, are exactly the same age as their US counterparts. 

Just for completeness, let’s look at one more split of the data. The chart below shows the same data on a yearly basis, just to see if there’s any material variance by year.

As you can see, there really isn’t any material differences by year and there isn’t a trend of the gap widening between the two countries.

So the next time you hear someone putting down Canadian entrepreneurs for selling their tech businesses too early, we can all correct them and say its simply not true…

About the author

Ed Bryant is the President and CEO of Sampford Advisors. Ed started Sampford because he wanted to provide world-class M&A advisory services to Canadian technology companies. Ed has over 20 years of experience including over 17 years in Investment Banking with Deutsche Bank, Morgan Stanley and Sampford in Hong Kong, Singapore, New York and now Ottawa. In that time, Ed has raised in excess of $20 billion in equity and debt capital and completed over $10 billion in M&A transactions.

Visit us at www.sampfordadvisors.com.

Data Source: Pitchbook.