Topic: Technology and innovation

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Technology and creativity: keys to unlocking real estate?

Samantha Sarkozi (Toronto)By Samantha Sarkozi (Toronto) on Posted in Real estate, Technology and innovation

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

… Continue Reading

Record year predicted for the cybersecurity industry

Monica Wong (Toronto)By Monica Wong (Toronto) on Posted in M&A, Technology and innovation

With a growing reliance on technology, it does not come as much of a surprise that the importance of cybersecurity is increasing as well. In its Mid-year Market Review, Momentum Cyber reported that $2.3 billion had already been lost as a result of cryptocurrency breaches. This staggering loss may be one of the many reasons why there is a greater focus on cybersecurity and why the number of mergers and acquisitions (“M&A”) in the cybersecurity sector has been rising. It was even predicted in August 2018 that this would be a record year for the industry.

This prediction … Continue Reading

Managing information technology risk to improve M&A outcomes

Troy Ungerman (Toronto)By Troy Ungerman (Toronto) on Posted in M&A, Technology and innovation

An organization’s technology systems are an integral part of its business. Integrated into all aspects of its operations, the possible failure of these systems has been the top concern in Allianz Group’s survey of over 1,900 risk management experts for six straight years. High profile incidents such as the Visa service outage, where a systems error shut down all Visa transactions in the UK and Europe demonstrate that even large, sophisticated companies are at risk.

Given the considerable risk and consequences of technology errors, it is surprising that information technology (IT) systems are often an overlooked element in mergers … Continue Reading

Canadian venture capital investment continues to increase in H1 2018

Troy Ungerman (Toronto)By Troy Ungerman (Toronto) on Posted in Corporate finance, Technology and innovation

The Canadian Venture Capital & Private Equity Association recently published its 2018 first half (H1 2018) report on Canadian venture capital (VC) and Canadian private equity (PE) investment. While Canadian PE investment remains feeble, Canadian VC investment has continued to climb to incredible heights.

A review of the increasing trends in Canadian VC investment, with respect to the volume and size of deals as well as the stages and sectors engaged, reveals that VC investment in Canada is very robust and showing no signs of slowing down. With H1 2018 already outpacing last year, … Continue Reading

Quebec opens its door to InsurTech: opportunities to grasp

Pier-Olivier Poisson (Montreal)By Pier-Olivier Poisson (Montreal) on Posted in M&A, Technology and innovation

The insurance industry is changing. A more digitally savvy customer base and the emergence of new technologies are reshaping the sector. Enter technology-led companies known as “InsurTechs.”

In Québec, this innovative business approach along with a substantial legislative change is expected to increase M&A transactions.

Mindful of offering a regulatory environment that is flexible and apt to respect the evolution of technologies and consumers’ needs, the province adopted Bill 141, An Act mainly to improve the regulation of the financial sector, the protection of deposits of money and the operation of financial institutions, on June 13, 2018. This … Continue Reading

M&A and the advancement of the RegTech industry

Troy Ungerman (Toronto)By Troy Ungerman (Toronto) on Posted in M&A, Technology and innovation

The rapid advancement of technology has moved at an unprecedented pace, offering the ability to automate “trust” and “quality” of the products and services being provided on a daily basis. Nevertheless, after the financial crisis in 2008, billions of fines and penalties were imposed on companies that failed to carry out regulatory standards. This exposed market inefficiencies and focused attention on solutions required to stay on top of compliance matters.

To avoid repeating history, regulators and governmental authorities have reformed the regulations by repealing traditional rules and replacing them with new and efficient ones. These intricate and new regulations can … Continue Reading

Increased M&A activity predicted as insurance industry evolves

By Simone Nash (Toronto) on Posted in M&A, Technology and innovation

The insurance industry is an evolving landscape. The emergence of new technologies and increased competition has created pressure to innovate while casting doubt on the viability of focusing on strategies emphasizing organic growth. These factors may drive an increase in M&A activity in the insurance industry, according to a report from KPMG International.

The report, which is based on interviews with insurance executives from around the world, concludes that the majority of insurance companies are seeking M&A opportunities in an effort to deploy their capital in pursuit of transformative growth. However, these companies will likely require significant support from M&A … Continue Reading

Digitalization – the pill for M&A failures?

Jaray Zhao (Toronto)By Jaray Zhao (Toronto) on Posted in M&A, Technology and innovation

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

A forward look into emerging technologies in M&A

Troy Ungerman (Toronto)By Troy Ungerman (Toronto) on Posted in M&A, Technology and innovation

As previously noted, businesses are keen to shine their spotlights on the surge of disruptive technology, particularly with the opportunities it stands to introduce, the existing standards it proposes to displace, and the upside it promises for bottom lines. In recent years, the rise of disruptive technology has created a boom for some industries while potentially upending others. For legal practice, the result is the same in both instances – these technologies have created new challenges, particularly for corporate M&A lawyers.

A prominent example of a disruptive technology is cryptocurrency. The exponential growth of cryptocurrency and its related technologies has … Continue Reading

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

Troy Ungerman (Toronto)By Troy Ungerman (Toronto) on Posted in M&A, Technology and innovation

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

Regulators comment on securities law implications for offerings of tokens

Matthew Lau (Toronto)By Matthew Lau (Toronto) on Posted in Corporate finance, Technology and innovation

On June 11, 2018, the Canadian Securities Administrators (“CSA”) published Staff Notice 46-308 Securities Law Implications for Offerings of Tokens (“Notice”).

The Notice follows from the CSA’s previous guidance in Staff Notice 46-307 Cryptocurrency Offerings, where the CSA explained that many cryptocurrency offerings involve the distribution of securities and are therefore subject to securities laws (including prospectus, registration, and/or marketplace requirements). The Notice expands upon this guidance to focus in particular on offerings of “utility tokens,” which is an industry term often used to refer to a token that has one or more specific functions, … Continue Reading

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

Sean Williamson (Toronto)By Sean Williamson (Toronto) on Posted in M&A, Technology and innovation

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

Global automotive M&A ends 2017 in high gear with no signs of slowing down

Troy Ungerman (Toronto)By Troy Ungerman (Toronto) on Posted in M&A, Technology and innovation, Transport

As seen in this recent PwC article, global automotive M&A activity was strong in 2017.  Automotive deal value increased 29.9% to $53.2b from 2016 to 2017 primarily as a result of two mega deals in the Auto-Tech sector, which PwC defines as “investments in connectivity, autonomous, electrification, ride-sharing and the software, sensors, intellectual property and other components that support these trends.”  For 2018, it is expected that investments in the Auto-Tech sector will continue to drive global automotive M&A activity.

Auto-tech deals spark M&A activity

Auto-tech deal value increased from $5.3b in 2016 to $26.7b in 2017. Further, deal volume … Continue Reading

Hacking your way through cyber due diligence

By Sara Josselyn (Toronto) on Posted in M&A, Technology and innovation

Last year saw an increase in the frequency of data breaches and this trend is unlikely to disappear in 2018. We previously reported on the importance of cybersecurity in the M&A due diligence process. Conducting due diligence of a target’s cybersecurity procedures has become even more crucial in light of Canada’s new notification requirements. These requirements, regulated by the Personal Information Protection and Electronic Documents Act (PIPEDA), are based on amendments made to PIPEDA in 2015 as well as a regulation proposed in 2017 called Breach of Security Safeguards Regulations (Regulations). The Regulations will impose new … Continue Reading

Canadian M&A: a look back 2017 and a glimpse into 2018

Troy Ungerman (Toronto)By Troy Ungerman (Toronto) on Posted in M&A, Technology and innovation

A retrospective look at 2017

In Canada, 2017 had the highest number of mergers and acquisitions (M&A) deals in the past five years. There were a total number of 2,274 deals carried out in 2017, compared to 1,956 in 2016. The number of “mega deals”, however, did not see an increase in 2017. “Mega deals” are categorized as deals that have a value of US $5 billion or more. The number of these types of transactions went down from seven in 2016, to two in 2017.

For 2017, PwC noted the following three common M&A trends:

1) Increased

… Continue Reading

Cybersecurity update: from transaction start to finish

By Sara Josselyn (Toronto) on Posted in M&A, Technology and innovation

Cybersecurity has never been more critical. This growing area of concern has been on the mergers and acquisitions (M&A) radar for some time, and we’ve previously blogged on its effect on the due diligence process, regulatory requirements, and overall acquisition risk assessments. With only 4% of organizations reportedly agreeing that their current cybersecurity strategies had been fully considered, with all risks incorporated and relevant threats and vulnerabilities monitored, it’s crucial to push forward in developing a comprehensive and current cybersecurity strategy to manage risks at all stages of an M&A transaction.

In a recent report… Continue Reading

Top M&A attractions in 2018: technology assets and international markets

Troy Ungerman (Toronto)By Troy Ungerman (Toronto) on Posted in M&A, Technology and innovation

According to Deloitte’s latest M&A trends report, corporations and private equity (PE) firms expect to see an acceleration of M&A activity in 2018, both in volume and size of deals, and with particular interest in technology assets and international markets.

Key Findings

After surveying more than 1,000 executives at corporations and PE firms on their views and expectations for 2018, Deloitte provides some insightful findings.

Technology acquisitions now rank #1 as a strategic driver for M&A deals

20% of those surveyed cite the acquisition of technology assets as the principal reason behind deals, which surpasses deals to … Continue Reading

Don’t be fooled! How traditional M&A differs from digital M&A

Troy Ungerman (Toronto)By Troy Ungerman (Toronto) on Posted in M&A, Technology and innovation

Over the past few years, we have seen a rising trend in digital technologies driving tech M&A deals for both tech and non-tech companies.

Technology brings its own set of challenges to the M&A space. The following are some of the many differences between traditional and digital M&A:

  • Wider target list: The list of targets in a digital M&A tends to be longer than in a traditional, non-digital deal. Therefore, a need for new screening methods arises if digital targets are involved.
  • Financing and valuation methods: Digital assets are often considered to be too expensive. Valuing digital assets begins with
… Continue Reading

Keeping real estate on trend with RealTech

Troy Ungerman (Toronto)By Troy Ungerman (Toronto) on Posted in M&A, Real estate, Technology and innovation

The impact of technology can be felt across virtually all sectors of the economy and real estate is no exception. In fact, technology affects all aspects of real estate from its procurement and development to its management and use. Real estate-specific technology is often aptly referred to as “RealTech”.

Explaining RealTech

The KPMG White Paper, “The Future of RealTech – Real Estate Technology: Threat or Opportunity?” defines RealTech as “technologies that impact the built environment and the real estate sector, either through business model innovation or product innovation, affecting the way we live, work and play”. The UK company, Popertee… Continue Reading

Why some tech M&As fail to deliver value

Jaray Zhao (Toronto)By Jaray Zhao (Toronto) on Posted in M&A, Technology and innovation

In a recent blog post, we explored the reasons why a sizable number of M&A deals fail to complete every year. As discussed in that post, the closing of an M&A deal does not necessarily announce the success of a transaction. In fact, as high as 60% of M&A deals fail to deliver value even after a victorious closing, as an A.T. Kearney study shows. The Harvard Business Review reports that the failure rate of an M&A deal falls in the range of 70 – 90%.

Extensive research has been conducted to locate the elements that are fatal to … Continue Reading

Smart contract applications in M&A: earn-outs

Mark Bissegger (Toronto)By Mark Bissegger (Toronto) on Posted in M&A, Technology and innovation

This blog has previously provided an overview of how blockchain technology and smart contracts might be adapted to the legal industry. In this post, we will explore the specific example of how these technologies may be able to simplify an earn-out agreement in an M&A transaction.

What are earn-outs?

In an earn-out, the seller of a business receives additional compensation after closing if the business meets certain financial goals. To put it simply, an earn-out is a series of “if-then” statements that determine how much the seller is paid based on different factors.

How smart contracts may help

Inherent in … Continue Reading

Adding value through tech deals

Troy Ungerman (Toronto)By Troy Ungerman (Toronto) on Posted in M&A, Technology and innovation

A new report by BCG asks the question of whether wading into tech deals can add value to companies. Based on BCG’s analysis of 37,000 tech acquisitions, the returns from such deals are mixed: about half generate positive returns for acquirers. This is the case regardless of whether the buyer itself is in the tech industry or outside of it. These findings are not out of line with findings in respect of acquisitions in other sectors.

There are, however, ways in which an acquirer of a tech company can try to tilt the odds in its favour.

BCG’s data shows … Continue Reading

M&A: the automotive industry’s new fuel?

Victoria Riley (Toronto)By Victoria Riley (Toronto) on Posted in M&A, Technology and innovation, Transport

Automotive technologies are evolving rapidly and impacting not only drivers’ automotive experiences but also, the automotive industry more broadly. From assistive technologies like bicycle sensors and back-up cameras to self-driving technologies, it appears that technological innovation will be critical in order for automotive companies to maintain their relevance and competitive edge in the marketplace. However, such innovation is complicated and largely outside of the auto industry’s wheelhouse. As a result, merger and acquisition (M&A) activity may be just the tool that these companies need for harnessing this innovation and competing effectively.

The automotive industry transformation

As alluded to … Continue Reading

Trends and opportunities in InsureTech M&A

By Sara Josselyn (Toronto) on Posted in M&A, Technology and innovation

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

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