“Acqui-hire” transactions, which are particularly prevalent in the context of start-up technology-related M&A transactions in the U.S., focus on acquiring a company primarily to obtain its employees and their skills, in addition to other possible assets (see our earlier post on acqui-hires). In these type of transactions, it is thought that the greatest perceived value in the target lies in its employee base or segment(s) thereof. If there is also perceived value in the intellectual property (IP) or other assets of the target company, an acquiror might purchase those assets and possibly license them back. In some cases, … Continue Reading
As technology has become embedded into most parts of our lives, the majority of companies have completed a digitization process. Maintaining a digital platform has become the new norm, and increasingly sophisticated technologies continue to be developed. Accenture’s Technology Vision 2019 (Vision Report), describes this as the transition to the “post-digital era,” where “digital” is a new normal and is no longer a sign, on its own, of innovation. The Vision Report highlights main technology trends that companies will need to get ahead of in order to become leaders.
The main questions related to this “post-digital shift” are; … Continue Reading
Artificial Intelligence (AI) has immense potential as a solution for cybersecurity vulnerabilities in M&A deals. Generally, M&A deals generate value and as such, understanding vulnerabilities on the acquirer and target sides is important for completion of the transaction. With the common usage of networks and servers to store high volumes of data by corporations, vetting for cybersecurity attacks has become a priority in the M&A due diligence process. In a recent study, IBM reported that the global average cost of a data breach has risen 6.4 percent over a 12 month period to $3.86 million. The average … Continue Reading
On February 21, 2019, Blackberry completed its acquisition of Cylance, a privately-held artificial intelligence (AI) and cybersecurity company. Acquisitions of AI companies like Cylance are becoming increasingly common as businesses seek to realize the opportunities in offering much-improved products or services to their customers. Canada, in particular, has become a hotspot for activity in the AI industry.
Acquiring an AI company is not always smooth sailing. There are common risks that buyers must be aware of prior to embarking on an acquisition.
Know where the data comes from
An AI derives its value from data sets used … Continue Reading
A relentless parade of new technologies is unfolding on many fronts – one of which includes the M&A scene. While not every emerging technology will alter a business’ landscape, certain technologies have the potential to disrupt the status quo, alter the way companies operate and rearrange value pools. These “disruptive technologies” can quickly displace established systems and set new industry standards.
As an example, earlier this year, Toronto-Dominion Bank made headlines for its acquisition of “Layer 6 AI”, a start-up company which uses artificial intelligence to analyze various forms of data and anticipate an individual customer’s needs. This announcement came … Continue Reading
According to a recent article published by Pitchbook, this year has already shown a positive momentum for deal-making in the U.S. banking industry – a trend worth monitoring as it is expected to surge further as the year progresses and U.S. banks (especially those that already have a Canadian presence) may be looking to acquire financial assets and operations north of the border.
Most recently, Citizens Business Bank announced that it would acquire Community Bank, pursuant to which Citizens’ total assets will increase from U.S. $878 million to U.S. $12 billion. This acquisition represents one of 19 M&A transactions that … Continue Reading
Voluminous information in M&A transactions
M&A transactions can be time-intensive, often involving contract discovery and analysis, due diligence, data room preparation, verification of representations and warranties, privacy issues and multijurisdictional privacy legislation and intellectual property protection, among other important aspects. As deals become larger in value and scope, the review and analysis of the foregoing information becomes both voluminous and jurisdictionally dispersed. The international nature of companies and deals often result in contracts that are drafted in languages other than those commonly spoken by the lawyers on a file. To maximize efficiency, minimize errors and drive down costs, law firms … Continue Reading
PwC has recently released the 2017 MoneyTree Canada report for Q3 2017 (the Report), which provides insight into the landscape for equity financings in emerging venture capital (VC) backed companies headquartered in Canada. While it may come as no surprise that financing activity has increased in Q3 2017, the magnitude of the increase, especially for Artificial Intelligence (AI) based companies, stands out as the focal point of the Report.
- Financing activity continues to increase: Annual investment is on track for another USD $2B year invested across more than 300 deals – record
Insurance companies have increasingly looked at technological innovation as both an opportunity to increase profit margins, and as a potential disruptive force in the industry, with some insurance executives estimating that one third of their operations may be lost to FinTech. On-demand insurance that allows a consumer to purchase insurance on an as-needed basis has started to enter the marketplace. Despite market disruptions, there are a lot of opportunities for traditional insurance providers to take advantage of technological advancements
In today’s data driven world, insurance companies can use data analysis to improve operational efficiency. There is also an opportunity for … Continue Reading
Smart contracts, which replace traditional paper documents with a computer program that automatically verifies and executes an agreement, are poised to fundamentally alter the way M&A and contract-based legal work is performed. Think of a smart contract as a small army of robot lawyers and accountants: once the parties agree to terms, these robots automatically implement the agreement’s terms (e.g., payment, termination, etc.) as each party performs, or does not perform, their end of the bargain.
What is blockchain?
Earlier this year, we discussed the increasing use of technology in the M&A deal process. To recap, a recent Mergermarket study revealed that the use of technology and big data were likely factors in the increasing frequency of unsolicited bids and corresponding decrease in frequency of broad auctions. Building on our earlier discussion, we now consider below the ways in which technology is used to facilitate deals.
Due diligence process
Artificial intelligence has already had significant influence on the due diligence process. For example, Kira Systems, an artificial intelligence contract analysis company, claims that their software has been used … Continue Reading
In today’s market, there is significant buzz around phrases such as automation, artificial intelligence, cloud computing, robotics and the like. Many businesses are investing in the fast-paced technology sector and innovating outdated systems for customer engagement. For example, earlier this year, the first U.S.-based robotic café opened its (figurative) doors to patrons in San Francisco, serving reasonably priced espresso drinks with a robotic arm behind a large pane of glass. Only one human is present to administer the machine and assist customers with orders. With the changing face of consumer interaction, it is demanded of businesses to act progressively, so … Continue Reading
While many people are still in shock after discovering that there is actually no human controlling the steering wheel in autonomous cars, tech companies, including Google, IBM, Yahoo, Intel and Apple, have found themselves in the middle of a gold rush for artificial intelligence (AI) companies. According to recent research by CB Insights, around 140 AI companies have been acquired since 2011, and the number of AI startup M&As has increased more than seven fold between 2011 and 2016. In fact, the race to invest in AI has been characterized as “the latest Silicon Valley arms … Continue Reading