Tag archives: technology

Fintech M&A Activity in 2020: The Digital Economy is Here

Paying for Payments

While uncertainty arising from the COVID-19 pandemic has slowed down most deal activity, Fintech, in particular the payments space, is a big exception. Recent analysis from KPMG revealed that UK payment deals in the first quarter of 2020 alone exceeded the total number of deals in 2019. Granted, deal sizes were relatively low value, but the incredible rate highlights how the usual frantic activity in this area has only been propelled by the unique challenges this pandemic has presented, namely the need to switch to cashless and contactless transactions. Canadian Fintech is also poised for more deal … Continue Reading

Providing or Procuring Ed-Tech Products? Educate Yourself about Privacy Matters

A new wave of advancement in the education industry has emerged. Schools, universities and colleges are relying more on technology now than they ever have before – and this reliance on technology will only increase in the coming years. Educational institutions are using technological solutions to assist in teaching, engaging in discussions with their students and more recently, in evaluating student performance and proctoring examinations on a remote basis.

As an educational institution entering into contracts with service providers who are offering ed-tech solutions or as a company providing such technological tools to various institutions, it is important to consider … Continue Reading

Purchasing Companies That Sell Technology to the Government: The Details Matter

Procurement contracts are increasingly used in both Canada and the United States (US), particularly with respect to technological services. Federal procurement expenditures for Canada amount to an average of CAD $22 billion in goods and services annually. Further, the US typically awards USD $500 billion in contracts annually, with Canadian companies actively participating in that market.

Where an acquirer is purchasing or investing in a vendor selling to government entities, the diligence process and subsequent transaction documents should carefully consider the risks arising from such dealings. Government contracting with respect to technological services, such as cloud computing, provide unique risk … Continue Reading

Evaluating the Legal Risks of Data Assets in M&A

Data is an essential asset for many businesses, and one that is increasingly acquired through M&A transactions. Identifying and assessing the particular legal challenges of data assets is crucial for acquirers to mitigate the risks associated with these assets and unlock their full value. While issues will depend on the particulars of each transaction, the following is a high-level overview of significant considerations.

What rights in the data assets is the acquiring company receiving?

Evaluating a target company’s rights to their data assets is often more complex and uncertain than for more tangible assets. Such rights are often limited by … Continue Reading

Acqui-hiring: What we know and what we need to know from a Canadian perspective

“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

Examining data analytics in M&A

The M&A world continues to evolve as transactions are becoming more diverse and complex. Timelines are getting shorter and acquirors have less time to assess their targets but more pressure to justify their acquisitions. Acquirors must simplify the process of acquiring a target, while simultaneously improving the accuracy of their predictions about the acquisition’s profitability. Could data analytics be one of the solutions?

More data is being created today than ever before. Generally, there are two kinds of data relevant to M&A transactions. The first is data created by companies spontaneously (e.g. social media chatter, CRM data, user … Continue Reading

How to ensure that emails of former employees do not fall through the cracks when purchasing a business

The importance of email in the workplace presents a variety of legal challenges when purchasing a business. Among those are concerns relating to emails and the email addresses of the seller’s employees who are no longer employed by the purchaser after closing.

First, there are confidentiality concerns in connection with former employees receiving information they should no longer have access to. Second, there are concerns that customers or other relevant individuals may be emailing former employees instead of the current employees of the purchaser. This can result in missed sales opportunities, gaps in customer service and a negative impact on … Continue Reading

2019 in Review: eSports edition

The eSports industry experienced monumental growth in 2019 and is well underway to becoming a financially lucrative market.

By the end of last year, eSports had over 433 million global viewers, more than American Football and rugby combined, and is expected to reach over 645 million viewers in 2020. For perspective, the 2019 League of Legends World Championship alone amassed a peak viewership of 3.98 million, far surpassing earlier eSports viewership records.

2019 also marked the year that eSports became a billion dollar industry. In line with its massive following, eSports drew in record revenues last year, experiencing a 26.7% … Continue Reading

Cybersecurity in M&A Transactions: Friend or Foe?

The heavy reliance on technology in today’s data-driven world means that cybersecurity threats must be taken seriously. More specifically, with respect to M&A transactions, a target’s cybersecurity mechanisms have become an important part of the due diligence consideration. Indeed, it is important to have a firm grasp on the nature and extent of a target’s cybersecurity vulnerabilities, the likelihood of a breach, and the procedure in place to remedy a breach, if necessary. These considerations have the power to significantly alter the value of a transaction, or even derail it entirely.

With the introduction of EU’s General Data Protection RegulationContinue Reading

Chamber of Digital Commerce Releasing the First Ever Comprehensive Report on Canada’s Blockchain Ecosystem

Over the last decade in which the digital economy has grown at an unprecedented pace across industry sectors, blockchain technology and distributed ledger technology have shown the ability to reform the ways in which businesses and governments operate. To better understand Canada’s blockchain ecosystem, on October 4, 2019, the Chamber of Digital Commerce Canada released Canada’s first ever comprehensive report examining the country’s burgeoning blockchain ecosystem.

Through data collected from more than 150 stakeholders from industry, government and academia, this report serves as a baseline measurement of the Canadian blockchain ecosystem for tracking future growth and GDP impacts over the … Continue Reading

Emerging Trends in Information Technology (IT) Mergers and Acquisitions

Canada’s burgeoning information technology (IT) sector is a standout in the Canadian mergers and acquisitions landscape. A recent report by Duff & Phelps illustrates that in the first half of 2019, IT was the third most active deal-making sector in Canada with over 104 closed transactions. Against this backdrop, three trends emerge:

  • ‘Buying into’ privacy or cybersecurity risk. Buyers are becoming increasingly aware of the importance of conducting rigorous due diligence on a target company’s privacy and cybersecurity systems and practices. Marriott’s data breach in 2018, where about 383 million guest records globally were exposed to cybercriminals, highlights this.
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(Un)masking value: how the data masking market can impact M&A activity

Recent rumblings about the “data masking” market have put this concept on the radar of many, which warrants a closer look at the relevant trends and the potential of data masking. The information age has made cybersecurity a necessity and the increase of data breaches and malware attacks have led to calls for greater data protection.

What is data masking?

Perhaps surprisingly, the purpose of data masking is more than just obfuscating original data in order to protect it. An additional layer is the process of creating a structurally similar, yet inauthentic version, of an organization’s data that can be … Continue Reading

5G technology driving M&A activity in the telecommunications sector

The much anticipated rollout of fifth-generation wireless (“5G”) technology and changing consumer habits are expected to drive M&A transactions in the telecommunications sector over the next year. According to EY’s May 2019 Global Capital Confidence Barometer (the “EY Report”) 55% of telecommunications executives expect to actively pursue acquisitions in the next year, a significant increase from the long-term average of 45% for the telecommunications sector.

As consumption patterns for video and gaming continue to change telecommunications executives are anticipating the impact that future 5G speeds and capacity will have on adjacent industries like mobile streaming services … Continue Reading

Merge with caution: the future of food delivery services

The convenience and efficiency of meal ordering applications (“apps”) has led to a rapid development in food delivery services. However, despite the ever-growing popularity of online takeout, the increase in food-delivery companies and the decrease in restaurants offering food delivery service is slowing the growth of what could be a lucrative market.

Consumers of this market are notoriously fickle in their loyalty. Rather than order through a specific app, consumers are more likely to order through apps which offer a wide variety of restaurant options and cheaper fees. Recent media attention has highlighted the conflict between delivery companies … Continue Reading

Good eats: rising interest in dairy & meat alternatives driving M&A activity

As consumer demand for dairy and meat alternatives increases, established food manufacturers are looking to supplement their offerings by entering into M&A transactions with emerging meat and dairy alternative manufacturers. According to a recent report by the Good Food Institute (GFI), there have been 46 completed investments and acquisitions of vegan food manufacturers in 2018 alone, with the largest acquisition having a value of $12.5 billion. Many leaders in the meat industry are starting to acquire and invest in the dairy and meat alternatives market to tap into consumer demand. Investing in vegan alternatives is essential for food manufacturers to … Continue Reading

Uses of blockchain in the M&A process

We have previously explored some potential uses of blockchain in the M&A process. Generally, blockchain refers to a growing list of blocks linked by cryptography. Each block contains a timestamp and a link to the previous block. When a new block is added to the growing list, it is verified by independent parties on the peer-to-peer network and is by design, decentralized and resistant to modification of the data. The possibilities are immense – but ultimately, what are some of the ways that blockchain can help the M&A process?

One key area may be with the use of “smart contracts” … Continue Reading

3D printing – the manufacturing industry’s “comeback kid”

Speed. Scale. Diversity.

What do these words have in common? According to Deloitte, they are the three main reasons that 3D printing, also known as additive manufacturing (AM), is experiencing a sustained resurgence in 2019.

Deloitte recently published the 18th edition of its Technology, Media & Telecommunications Predictions report, which forecasts both global and regional trends in its titular sectors for 2019. In the past, Deloitte reports explored 3D printing, expressing cautious optimism in the face of the market’s supposed overenthusiasm for the new technology and its seemingly endless possibilities. Though the 3D printing market never collapsed, … Continue Reading

eSports: a new MVP for real estate?

As we have previously discussed, the eSports industry has garnered immense popularity and is projected to grow considerably. While this projected growth may present new targets for acquisitions, partnerships, sponsorships and the like, it may also create new real estate opportunities – specifically, in the form of eSports stadiums and arenas. Although likened to traditional sports stadiums and arenas, the infrastructure, facilities and amenities of their eSports counterparts will be quite different. Most notably, these venues will be constructed with an emphasis on the “fan experience” and technology. The eSports stadiums and arenas already in operation throughout the … Continue Reading

Technology and creativity: keys to unlocking real estate?

With increasing globalization, shifting demographics and advancing technologies, just to name a few, society is changing rapidly. These changes, as reflected by evolving tastes, preferences and needs, influence both how and where people live and work. As part of their joint publication, Emerging Trends in Real Estate 2019 (the Report), PwC and the Urban Land Institute forecast that in response to mounting pressure on the Canadian real estate industry (the Industry) to confront these changes, we may begin to see Industry players increasingly embrace both technology and creativity.

Smart technologies may help the Industry adapt to a changing

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Digitalization – the pill for M&A failures?

It is a generally accepted fact that a significant number of M&A deals fail to deliver value post-closing. In a recent survey (the Survey) discussed in the Deloitte 2018 M&A trends report (the Report), 55% of respondents agreed that up to 25% of their M&A deals fall short of meeting or beating expectations. We’ve discussed the factors that can contribute to this failure on a previous blog post and in a recent article, including: cultural and business integration issues, poor due diligence, negotiation errors, lack of involvement by owners, and an overall lack of clarity. Moreover, a … Continue Reading

Evaluating the risks of open source software in M&A transactions

Open source software (OSS) has emerged as a significant market disruptor in recent years. OSS serves as an alternative to commercial software licensing wherein the licensee does not need to pay for the license. This tends to make it particularly attractive to start-ups attempting to keep their costs down. However, the free use of the OSS comes with some additional considerations which need to be managed before an acquirer purchases a company making extensive use of OSS.

Some analysts have noted that, in the acquisition context, OSS can present a number of challenges, including security risks and compliance. … Continue Reading

A healthy dose of deal-making: M&A trends in the US and Canadian healthcare sector

In the first quarter of 2018, M&A activity across the world hit a 17 year record high according to Mergermarket’s Q1 2018 Global M&A Report. This is an 18 percent increase in value compared to the first quarter of 2017. This increase was affected by the surge in deal-making seen at the end of 2017 which carried over into 2018 as the US experienced mega US healthcare deals. In fact, US M&A activity during Q1 2018 was reported to represent 44.2% of the total global share. According to data from Bloomberg, the healthcare sector has already reported $156 billion … Continue Reading

The tech takeover: disruptive technology as a driver of M&A

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

Better, faster, stronger: revamping the M&A due diligence process with Artificial Intelligence platforms

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

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