Topic: Technology and innovation

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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

A-I Captain! Know the legal risks of buying an AI company… or go down with the ship

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

Fintech is thriving! Global investment more than doubles in 2018

KPMG recently published its “Pulse of Fintech” report on global investment in fintech for H2 2018. Here’s what you need to know:

  • Global investment in fintech companies hit $111.8B in 2018 (with 2,196 deals), more than doubling global fintech investment in 2017. This was partly due to a small number of mega deals.
  • In the Americas, 2018 fintech investment hit $54.5B across 1,245 deals.
    • At $52.5B (up from $24B in 2017), investment in United States fintech companies made up the vast majority, mainly driven by a strong number of $100M plus mega deals.
    • Canada’s fintech market remained steady in
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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

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

The impact of 5G technology on M&A

Global M&A activity in the technology, media and telecommunications industry reached an all-time high of 3,389 deals in 2018. The year was marked by several of the largest merger valuations in history, even though 70% of deals were for less than $100 million, demonstrating that much of the M&A activity was driven by smaller companies. This M&A activity is expected to remain strong and could increase even further in 2019 as the entire industry is set to be impacted by the implementation of 5G wireless technology. 5G – or fifth-generation – network technology is the newest iteration of mobile wireless … Continue Reading

Strategies for parenting start-ups, post-acquisition

In recent years, we have seen more acquisitions of start-ups by big corporations in the tech industry, healthcare, retail, fashion, beauty, food, and transportation. The benefits of M&A transactions in these sectors has been more widely recognized. For instance, for a start-up, partnering with a large corporation provides broader market access, deeper industry knowledge and accelerated brand development opportunities. From the perspective of the corporation, it means access to growing markets, new technologies, and tapping into niche skills, talents and entrepreneurial and agile culture.

Despite the surging interest in enhancing collaborations between start-ups and bigger companies from both sides, Accenture 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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Record year predicted for the cybersecurity industry

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

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

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

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

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

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

A forward look into emerging technologies in M&A

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

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

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

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

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

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

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

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

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

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
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Keeping real estate on trend with RealTech

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, PoperteeContinue Reading

Why some tech M&As fail to deliver value

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

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