Q-News Mike's Commentary

August 2010

M&A Activity Trends Higher Despite Growing Economic Concerns

Posted in Mike's Commentary

M&A sources that we follow have all reported that the second quarter of 2010 was a strong one for technology deals in the U.S. with both the number of transactions and the value of transactions improving markedly. Depending on the source, deal volume increased on a year-over-year basis by between 12% and 24% while deal value increased between 27% and 43%. While the difference between the reported sources is significant, the trend from all sources is definitely upwards, which is very positive given the current state of uncertainty in the US and concerns over another economic slowdown or recession. It will be interesting to see the results of Canadian transactions, particularly since Canadian sources reported that first quarter M&A activity in Canada showed its first...

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July 2010

The shoemaker's children are often shoeless

Posted in Mike's Commentary

I guess I’m a good example of the old proverb about the shoemaker's children.  While my firm has been busy selling our client’s businesses we simply haven’t spent enough time selling ourselves.  During the past month I’ve had a number of meetings with companies and individuals who were not fully aware of the fact that Q1 Capital is almost entirely focused on providing M&A advisory services to private Canadian companies looking to monetize the value of their businesses.  As with many of the successful companies that we work with, we have changed and adapted our business model to meet the challenges and opportunities presented by the North American capital markets.  Where we were once focused entirely on raising capital for technology companies from Canadian and US venture capitalists, in early 2006 we anticipated the decline in VC investment capital and transitioned our business model to the active and important M&A advisory component of the capital markets.

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June 2010

May Shows a Nice Uptick in Activity

Posted in Mike's Commentary

We saw a nice uptick during the month of May in terms if both reported deals and dollars invested.  For the month, we found a total of 14 transactions being reported for $84.7 million with sizable investments being made in Delta Q Technologies ($17 million), Blueprint Software Systems ($14.3 million), Vantrix ($14 million), Vivonet ($8.5 million), Energate ($7.2 million) and Sidense ($5 million).

There was plenty of interesting news on the VC front...

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May 2010

BumpTop Me!!!!

Posted in Mike's Commentary

First came Google and then came BumpTop, a company name that is poised to become a verb. Can’t you just see all of the early-stage technology companies with inflated views on valuation and the inevitable or preordained sale to Google, Microsoft or Oracle looking you in the eye and telling you straight faced that they are the next BumpTop? All kidding aside, kudos to Anand Agarawala, his angel investors, Amar Varma at Extreme Venture Partners and Scott Pelton at Growthworks, for believing in Anand’s ability to turn his masters thesis “Enriching the Desktop with Physics, Piles and the Pen” into reality, grow his team to 16 employees, and convert $1.65 million in investment capital into a rumored $30 million sale to Google. Hopefully we’ll see lots more Canadian companies get “BumpTopped” in the near future!

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April 2010

Plenty Of Players But Still Little Money

Posted in Mike's Commentary

While reported financings in March simply confirm the continued weakness of the Canadian private investment sector, a real positive note was the large number of firms that made investments last month.  These included: Covington Capital, VentureLink, Wellington Financial, MMV Financial, Morningside Technology Venture,BDC, Northwater Intellectual Property Fund, Ontario Centres of Excellence, Chrysallix Energy, Green Angel Energy Corporation, Northbridge Capital Partners, Caisse de depot et du Quebec, FIER Longueuil, Fonds Soutien Longueuil, Investissement MSCI, ACE Management, NSBI Venture Capital, MSBI Valorisation, Go Capital Fund, BankInvest New Energy Solutions (Denmark), SiC Processing (Germany), Bekaert (Belgium), Epic Ventures, Gideon Hixon, Enertech Capital, Cycad Group, Espirito Santo Ventures, Milcom Technologies, Applied Ventures, Phoenix Fire and Merrimaker.  No doubt the large number of foreign investors bodes well for the sector.

 

Another positive note during the month was...

 

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March 2010

Can’t you feel it getting warmer?

Posted in Mike's Commentary

Good news on the M&A front with just published 2009 results showing that we ended the year with a very strong quarter.  Crosbie & Co. reported that the number of fourth quarter transactions increased by 18% year-over-year with 254 transactions totalling $32.9 million versus 216 transactions worth $19.9 million during the same period in 2008. Importantly, Q4 represented the third straight quarter of increasing activity.  For the year, early numbers indicate that a total of 837 transactions worth $1.348 trillion were completed, representing a 27% decrease from the 2008 transaction volume of 1,152 deals but an increase of 23% over 2008 transaction value of $1.097 trillion.

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February 2010

"Flat" appears to be the new "Up"

Posted in Mike's Commentary

We ended 2009 with another disappointing month and January’s results were basically flat year-over-year, which is not a good thing when we reflect on the state of the market 12 months ago. Nonetheless, we do see positive signs in the fact that so many different VC investors took part in transactions. In December, we saw investments from BDC, Propulsion Ventures, The Solidarity Fund QFL, Yaletown Venture Partners and the New Brunswick Innovation Foundation while January saw announcements from Wellington Financial, JLA Ventures, Tech Capital Partners, Ontario Emerging Technologies Fund, BDC, Growthworks (Atlantic Venture Fund and Canadian Fund), Ventures West, Pangaea Ventures, First Leaside and Ontario’s Investment Accelerator Fund.

What continues to be of great concern is the number of Canadian VCs that are investing in US companies while Canadian technology companies continue to face so many challenges when trying to attract capital. I still have trouble believing that there are not enough good Canadian companies looking for capital. During December, we saw...

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December 2009

November Is the Proverbial Turkey

Posted in Mike's Commentary

November turned out to be a real turkey with only two (yes, two) companies reporting new financings.  This is the lowest level of reported financings that we’ve seen since we began tracking transactions in November 2001.  Thankfully, December is looking to be a much better month with a reasonable amount of activity reported during the first three weeks of the month.  Despite the dismal level of reported activity, increased activity at some of the firms in town along with

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November 2009

October 2009 “Have We Hit Bottom?”

Posted in Mike's Commentary

October turned out to be a rather positive month with 12 companies reporting having received $102 million in investment capital with one additional company reporting a transaction for an undisclosed amount.  Importantly, the month was the best that we have seen for both amount invested and number of deals since September 2008.

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October 2009

September - hopeful signs of renewed international interest

Posted in Mike's Commentary

While September’s reported investment levels do not point to any sign of a turnaround, there was positive activity from foreign groups renewing their activity in Canada.  Of the ten reported transactions, four included a total of six international investors.  New York-based Mistral Equity Partners invested in Worldlynx Wireless; Boston-based Auctus Private Equity Fund agreed to provide up to $10 million to Capital Reserve Canada; Chicago-based venture firm JK&B Capital, Innovacom (Stockholm, Paris, San Francisco) and Entrepia (Silicon Valley, Montreal, Tokyo) invested alongside Summerhill Venture Partners and BDC Venture Capital in Vantrix Corporation; and Intel Capital invested in Transgaming Technologies.  Furthermore, while it doesn’t help Canadian entrepreneurs facing the challenge of finding capital, we saw.....

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