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GUEST:
I keep hearing, from numerous people, the complaint that Canadian businesses sell too early, especially when compared to their U.S. counterparts. It’s an interesting notion that is always raised when the sale of a large Canadian tech company happens – BlueCat Networks’ recent $400 million sale is a good example.
Rather than just relying on hearsay, I thought it was worth analyzing the numbers to see if it is true that Canadian firms sell too early.
So, if we look at technology companies that have been sold in Canada and the U.S. over the last five years (2012 – 2016) and analyze the mean and median age at sale, we get the results in the chart below:
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Above: Data source: Pitchbook
Pretty interesting set of results if you ask me! So in reality, over the last five years, Canadian companies have, on average, either been older than their U.S. peers at the time of a sale (16.2 years vs. 15.5 years) or, when comparing medians, are exactly the same age as their U.S. counterparts.
Just for completeness, let’s look at one more split of the data. The chart below shows the same data on a yearly basis, just to see if there’s any material variance by year.
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Above: Data source: Pitchbook
As you can see, there really aren’t any material differences by year, and there isn’t a trend of the gap widening between the two countries.
So the next time you hear someone putting down Canadian entrepreneurs for selling their tech businesses too early, you can let them know it’s simply not true.
Ed Bryant is President and CEO of Sampford Advisors, an M&A advisory firm for Canadian technology companies. Ed has over 20 years of experience, including over 17 years in investment banking with Deutsche Bank, Morgan Stanley, and Sampford in Hong Kong, Singapore, New York, and now Ottawa. In that time, he has raised in excess of $20 billion in equity and debt capital and completed over $10 billion in M&A transactions.
