Is M&A by Canadian Acquirers on the Rise? — Sampford Advisors - Expert Tech M&A Advisor (Software, IT Services, SaaS, Hardware)

In our business we have seen a rise in the number of clients that are doing buyside M&A - i.e. proactively buying other companies. As way of example, we at Sampford have completed three such transactions in the last couple of years and as a result talked to hundreds of companies across North America regarding their appetite to pursue M&A with a Canadian acquirer. And we are currently working on another two mandates for Canadian buyers. While we don’t often see Canadian buyers in our sellside processes, we ask ourselves in this blog post if our buyside work is an isolated occurrence or is this a pick up in Canadian buyers part of a bigger in trend.

The chart below shows that the number of technology deals completed by Canadian acquirers has steadily been on the rise, rising from 93 transactions in 2009 to 198 transactions last year.

However, we have seen a significant drop-off in 2019 with current year-to-date deal volume annualizing to just 117 transactions (down 41% year-over-year). We normally see a flurry of deal activity in the fourth quarter so hopefully this year-over-year gap in M&A closes itself somewhat.

If we look at the same time period and the $ volume of tech M&A transactions by Canadian acquirers, then its definitely a lot more up and down as evidenced by the next chart.

So what does this tell us? Well, even though the number of transactions has increased dramatically, the amount of $ deployed into M&A is up, but not as materially. So this would seem to indicate that the transactions haven’t increased in size that dramatically over the same time period. And this brings us to our final data set, where we look at the average deal size over the same period and you will notice the trend more clearly.

Encouragingly the average deal size has been increasing over the last few years rising from a low of $7.3m in 2014 to almost double that in the 2019 YTD period at $14.5m. But its been more volatile when we look at the last ten years as a whole.

So to conclude, it does seem like Canadian tech companies are warming to the idea of using acquisitions to supplement organic growth. The bigger question is whether this year’s drop in overall deal volume is a blip or part of a bigger trend as Canadian tech companies potentially become more conservative again what with the increased macro-economic concerns.

About Sampford Advisors

Sampford Advisors is a boutique investment bank exclusively focused on mid-market mergers and acquisitions (M&A) for technology, media and telecom companies. We have offices in Toronto, Ottawa and the US and have done more mid-market tech M&A transactions than any other adviser.