Unless you've been living under a rock for some time,
you'll recall the exchange in The
Social Network between Sean Parker, Mark Zuckerberg and
Eduardo Saverin: "this is no time to take your chips down. A
million dollars isn't cool. You know what's cool? A
If you're an entrepreneur or investor with audacious plans
and ambition – it's on your mind. What's the
best way to a billion dollars? Is it through an initial public
offering or an M&A sale transaction? These are good questions
to have to ask yourself if your business is growing fast and
you're meeting milestones, gaining customer traction and
building on revenue and earnings.
On the M&A side of the equation, we have large technology
companies including the likes of Google, Microsoft, IBM, Research
In Motion and Apple that have hordes of cash. They are committing
parts of their war chests to acquisitions. The growth in M&A
from these and other companies is motivated by a number of factors.
Most of these companies are caught in the cycle of almost constant
product and service innovation and change. Many see the acquisition
of innovative companies as a means to more efficiently grow their
businesses – either as a supplement to or in substitution
for internally generated innovation. Many of these companies are
looking further afield in an effort to build their workforce
– often referring to a 'war for talent' as they
seek out additional experienced skilled teams and, in particular,
On the other side of the equation, despite the overall economic
turmoil, we have seen a growing stream of high profile IPOs
completed over the course of 2011. Companies such as LinkedIn,
Pandora and Groupon are all now listed in the United States. Others
such as Zynga and Yelp are currently in registration and now we
have rumours (again) of a Facebook IPO in 2012. These are all (or,
all going according to plan, will be) new multi-billion dollar
market cap public companies. Question the merits of an investment
in these newly-public technology companies and critique some of the
investment banking and other tactics involved if you wish. At the
end of the day, however, these IPO have or will result in a select
group of new billionaires from among the cast of entrepreneurs and
Recent Canadian Experience
The vast majority of Canadian exits are by way of M&A and
Canadian businesses have been well-positioned to take advantage of
the M&A trends described above. So far in 2011 we have been
fortunate to be part of many of the high profile Canadian M&A
success stories out there. These include (to name but a few) the
sale of Radian6 to Salesforce.com, the sale of Pushlife to Google,
the purchase of Five Mobile's assets by Zynga and most recently
the sale of Kobo to Rakuten.
IPOs in Canada are generally much smaller than the high profile
US public offerings described above. Most Canadian technology
companies will acknowledge that they don't look to the Canadian
public markets as a complete answer to unlocking shareholder value.
It is often one further step along the path to liquidity. While
none of the high profile public offerings described above involve
Canadian companies, there has been some IPO activity in Canada.
Both Toronto-based NexJ Systems and Vancouver based Avigilon Corp.
completed IPOs in 2011 and others are anticipated going forward if
Bill Tatham is currently the Founder and CEO of
NexJ Systems but has also had past success as the Founder, Chairman
and CEO of Janna Systems which he took public and ultimately sold
to Seibel Systems.
Jeff White was most recently the CFO of Radian6
which was sold earlier this year to Salesforce.com and before that
he has had past success as part of the senior management teams who
founded, built and sold iMagicTV and Q1 Labs.
Scott Munro is currently a Founder and Managing
Director of Pagemill Partners, a Silicon Valley-based investment
bank, where he works with a broad range of M&A and finance
mandates for technology businesses but he too has a history of
success as an entrepreneur in building successful technology
businesses including Savoir Technology Group.
Each has unique knowledge and first hand experience in planning
for, managing and executing successful M&A and IPO transactions
both in Canada and the United States. I will share some of their
insights here for those of you who are not able to be at the
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).