M&A Summary: Q4 2019 - Technology & Life Sciences

February 25, 2020

M&A transaction volume involving Canadian technology businesses was up during this past fiscal year, with 420 deals announced or closed during the period (119 of which came during Q4-19). This represents a 28% increase over the 329 transactions announced or closed in 2018.

An interesting trend is the increasing percentage of domestic companies acquiring Canadian tech businesses. During FY19, we noted that 45% of transactions included a buyer and target domiciled within Canada, whereas that percentage has been closer to 25% or 30% in the prior two years. Meanwhile, the technology sector has ranked higher than in previous years in terms of deal volume and size, relative to other Canadian industries. In Q4 of 2019, Technology ranked 4th and 5th respectively in both the number of M&A transactions and total dollar values of transactions. M&A activity in Technology has remained stable or grown during recent quarters, whereas industries such as manufacturing and food & beverage have recently slowed. This points to Canada's continuing development into one of the global leaders in technology, holding a number of attractive, growing acquisition targets.

One of the more interesting recent deals in this sector is the acquisition of Posera Ltd. (“Posera”) by Payfacto Inc. (“Payfacto”) as part of Payfacto's goal to expand its array of software solutions and increase its global market share. Posera is a leading provider of hospitality technology solutions with a technology suite that manages all aspects of merchant operations. Posera's full-service solutions include Maitre'D, a robust and comprehensive point-of-sale system that includes hardware integration services, merchant staff training, system installation services, post-sale software, and hardware customer support; KDS (Kitchen Display System), a stand-alone kitchen display and monitor that facilitates kitchen management; and SecureTablePay, a leading EMV compliant pay-at-the-table solution. This transaction will strengthen and accelerate PayFacto's growth story from leveraging Posera's global customer-base and diverse service offering. BDO Canada LLP acted as exclusive financial advisor to Posera and assisted in the completion of the arrangement.

Select Technology Transactions - Q4 2019
Target Buyer Date Transaction Description
The Apri Group of Companies People Corporation (TSXV:PEO) 2019-11-29 People Corporation (TSXV:PEO) acquired The Apri Group of Companies for $45 million CAD on November 28, 2019. The Apri Group of Companies generated approximately $17 million CAD in revenue annually.
Posera Ltd. (TSX:PAY) Payfacto Inc. 2019-11-25 PayFacto Inc., a leading payment solution provider in North America and Posera Ltd. (TSX : PAY), a global provider of hospitality industry software, today announce that they have entered into an Arrangement Agreement pursuant to which PayFacto will acquire all of Posera's issued and outstanding common shares for $14.5 million CAD on a cash free, debt free basis, in an all cash transaction. Posera has been assisted in this strategic review process, initiated over six months ago, by BDO Canada LLP as its exclusive financial advisor.
Carbonite, Inc. Open Text Corporation (NasdaqGS:OTEX) 2019-11-11 Open Text Corporation (NasdaqGS:OTEX) entered into a definitive agreement to acquire Carbonite, Inc. (NasdaqGM:CARB) for approximately $840 million USD on November 10, 2019. Open Text Corporation will make a tender offer to acquire all shares of Carbonite at $23 USD per share in cash. Total enterprise value of the transaction is approximately $1.4 billion USD, inclusive of Carbonite's cash and debt.
DataCandy Software, Inc. Paystone Inc. 2019-11-07 Zomaron Inc., a leading Canadian fintech firm, and DataCandy, a Montreal-based software company, have joined forces and will rebrand under the Paystone Inc. name, effective today. As part of the acquisition, Paystone will retain the award-winning DataCandy gift card and loyalty platform and establish its Montreal office as the company's second headquarters. Paystone is a market-leading provider of customer engagement solutions for North America, processing 50 million transactions annually. Its expansive portfolio consisting of payment processing, customer loyalty, and gift card solutions is used at over 25,000 locations across Canada and the United States.
Kounta Pty Ltd Lightspeed POS Inc. (TSX:LSPD) 2019-10-20 Lightspeed POS Inc. (TSX:LSPD) entered into an agreement to acquire Kounta, Pty Ltd. for $43.3 million USD on October 20, 2019. The deal value includes $35.3 million USD in cash on closing and the issuance of 306,290 subordinate voting shares in the capital of Lightspeed subject to post-closing working capital adjustment. An additional $7.5 million USD in deferred cash consideration along with the issuance of 0.3 million subordinate voting shares in the capital of Lightspeed is payable to certain Kounta employees through October 2021, in each case if certain milestones, including the continued employment of those employees, are achieved by June 2020 and October 2021.

M&A activity
Buyer & target geography
Quarterly technology deals involving Canadian businesses

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