Tag archives: IPO

Narwhals, unicorns and profits – Canadian tech start-ups are on the rise

Unicorns and narwhals – what business do these creatures have in boardrooms and on stock exchanges?

“Unicorn” and “narwhal” are industry terms used to describe certain private start-up tech companies. “Unicorns” are start-ups valued by investors at $1B or more, a rare and substantial feat that has earned them their mythical nickname. “Narwhals” sit a stage below, vying for graduation to unicorn status.

The Canadian Unicorn Pipeline

The Toronto-based Impact Centre recently posted its 2019 Narwhal List (the List), which identifies nascent Canadian companies that may evolve into unicorns, as well as the financial avenues that can facilitate such … Continue Reading

Q3 review: global M&A volume dropping, despite record highs

Thomson Reuters recently released a report on global mergers and acquisitions in the first nine months of 2018. According to the report, global M&A volume fell 32% in Q3 2018 compared to Q2 2018. The number of deals – 35,543 – in the first nine months of 2018 dropped 9% compared to the same period of 2017. Overall, however, global M&A activity has remained strong in 2018: in the first nine months of 2018, M&A activity reached a new record of nearly US$3.3 trillion. This represents a 37% increase compared to the same period of 2017.

Increase in mega deals

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Canadian M&A activity: mixed results for Q3 2017

As the Globe and Mail reports, Thomson Reuters has recently released figures for Canadian mergers and acquisitions in the third quarter of 2017.

The figures show that while the volume of deals involving Canadian companies in the third quarter was higher than a year ago, the total value of those deals declined. 672 mergers or acquisitions were announced in the third quarter in 2017, while 605 mergers or acquisitions were announced in the third quarter a year ago. This 11% increase in the total number of deals is tempered by the fact that the value of deals fell from … Continue Reading

Bye bye bye: private equity exit strategies

Exits are central to the private equity investing process and a PE firm will consider a variety of different exit strategies to realize its return on investment. Four of the most common PE exit strategies are: trade sale, initial public offering, secondary buyout and leveraged recapitalization. A fifth exit option is also discussed below.

Trade sale

Trade sale is a commonly used exit route in which the PE sponsor sells all of its shares held in a company to a third party purchaser. The third party purchaser often operates in the same industry as the target company and has strategic … Continue Reading

Taking stock of SPACs: update for 2016

Earlier this year, we discussed the arrival and usage of Special Purpose Acquisition Corporations (SPACs) in Canada, focusing on the logistics and purpose of these capital holding shell companies.

To recap, a SPAC is a shell company that raises money through an initial public offering (IPO), then searches for a private company to acquire and bring to the market (Target Company). SPACs were thought to be particularly useful in Canada as (i) they fill a traditional gap in capital markets, making private acquisitions in the $100 to $500 million range, (ii) they provide Target … Continue Reading

Private equity exits and outlook

A private equity company generally receives the large majority of its returns on an investment upon exit of the investment, and as such the exit is an important part of the life-cycle of a private equity transaction. The most commonly used methods available to private equity investors to exit their investments are described below:

Initial public offering (IPO)

Under an IPO, the shares of the investment are listed on a stock market and sold to the public. In most IPOs, the private equity company exits the investment by selling its shares in the market after the shares are … Continue Reading

The capital pool company: an alternative way to go public

Going public

Going public is, expectedly, the goal of many private companies and their founders. There are two methods of taking a private company public—initial public offerings (IPO) and reverse take-overs (RTO)—that draw the most attention in our capital markets and headlines, most often because of the lucrative opportunities or surprising arrangements that they create. But there is another method of releasing a company’s privately held stock for wider retail ownership which combines elements of both an IPO and RTO: the Capital Pool Company Program (the Program). Although a purely Canadian investment structure, the Program … Continue Reading

The sudden rise of the Canadian SPAC

A dozen years after being embraced in the US, and six years after the TSX adopted rules governing its use, the Special Purpose Acquisition Corporation (SPAC) has finally arrived in Canada. This year, four SPAC initial public offerings raised almost $1 billion on Canadian markets, and two more recently entered the fundraising stage. With their popularity surging, Canadian investors ought to understand the benefits and risks associated with this unconventional investment vehicle.

An SPAC is a shell company that raises money through an IPO, then searches for a private company to acquire and bring to market. Upon … Continue Reading