Software and Technology Monthly Newsletter - December 2024.

In This Edition:

• December 2024 Key Highlights

• Canadian Tech Shunning Public Spotlight

• Clash of the Tech Titans

• Public Market Dashboard - December 2024

• Mergers and Acquisitions

December 2024 in Review

December 2 - Lightspeed Commerce (TSX:LSPD) cuts 200 jobs in a strategic reorganization, following 280 layoffs in April 2024. Concurrently, Toronto based Questrade Financial Group lays off an undisclosed number of employees.

December 4 - The Business Development Bank of Canada (BDC) launches the Data to AI program to assist SMBs in learning and accessing financing for AI adoption.

December 5 - Calian Group (TSX:CGY) to form a U.S. based subsidiary to generate more revenue from the government and defence sectors.

December 16 - WELL Health Technologies (TSX:WELL) rebrands SaaS subsidiary, WELL Provider Solutions Group as WELLSTAR Technologies in anticipation of a spinoff. 

Canadian Tech Shunning Public Spotlight

As part of Whitehorn’s year in review, we observed an increasing number of Canadian tech companies that opted to go private in 2024. This reflects a broader global theme within the software and technology sector over the past twelve months. With a company being public, management’s every move is continuously being thrust under the spotlight especially with investors prioritizing quarterly performance over long term success. The ability to act with more flexibility and not be scrutinized under a microscope are compelling reasons to consider a "go-private" transaction.

We highlight several going-private transactions below involving Canadian tech in 2024:

In addition to the above, Lightspeed Commerce (TSX:LSPD) announced a strategic review in September 2024, which includes a sale.

The role of private equity is increasingly prominent within the Canadian tech sector. Software aggregators such as Constellation Software, Tiny, Saas.group, Banyan Software, Balio to name a few are aggressively deploying acquisition capital. The technical expertise and networks within the tech ecosystem have served as a key driver behind their success in scaling the acquired companies at a higher rate, especially within vertical markets. Larger private equity firms such as Onex and Brookfield Asset Management have been deploying capital for acquisitions within niche tech markets as well more recently, resulting in a much more competitive process for tech business owners seeking an exit.

We predict private equity will continue to serve as a catalyst for future tech acquisitions nationwide. The ability to provide capital, expertise and a longer-term approach are key attractions for tech management teams without the public market burden. If you are thinking of selling your business, let’s connect and discuss your options and how Whitehorn can be of assistance.

Clash of the Tech Titans

Since the turn of the decade, two of the largest technological innovations have been AI and crypto. One might wonder what happens when you merge them. You don’t have to speculate any longer. In October 2024, San Francisco based Ai16z launched an AI-driven robo-advisor that invests in crypto on the investor’s behalf. The virtual fund manager is called AI Marc and unlikely traditional crypto asset management companies, AI is entirely dependent upon to make investment decisions. 

It is still early days for Ai16z, with the verdict still out on its effectiveness. However, the interest from the general public has been exponential. Launched on Solana, Ai16z exceeded US$100MM in market cap in just 18 days. As per The Coin Telegraph, it is currently fetching a valuation of over US$500MM. Following in the footsteps of modern-day high-profile mergers such as Exxon-Mobil, P&G-Gillette, Disney-Pixar, Facebook-Instagram, the AI-crypto combination is not in that league but may emerge as the first of what will become a revolutionary time for technology in the public markets going forward.

Financing

Public Market Dashboard Year-to-Date to November 2024

Mergers and Acquisitions

Dec 2 – Alithya Group (TSX:ALYA) acquires Montreal based XRM Vision. $35MM acquisition of Microsoft partner specializing in CRM and project portfolio management solutions with 85 specialists to enhance value service offerings and for cross-selling opportunities. 

Dec 3 – AgriFORCE Growing Systems (NASDAQ:AGRI) acquires Sturgeon County, AB based Bitcoin mining facility. $1.5MM acquisition of bitcoin mining facility in Sturgeon County. 

Dec 3 – Toronto based Volaris Group acquires French company Orkis. Acquisition of digital asset management software provider including Ajaris, a full web suite boosted by AI. 

Dec 3 – Ontario Municipal Employees Retirement System (OMERS) acquires Chicago based Integris. Acquisition of provider of IT, cloud and cybersecurity services from Frontenac. 

Dec 3 – Montreal based Petal acquires Port Colborne, ON based Dobsi Medical Billing. Acquisition of comprehensive medical billing solutions provider to strengthen Canadian market presence. 

Dec 3 – Vancouver based JDM Technology Group acquires Australian company Buildlogic. Acquisition of construction management software company to enhance software portfolio and to strengthen market presence. 

Dec 4 – Grand Rapids, MI based Service Express acquires Toronto based Mid-Range. Acquisition of managed infrastructure solutions provider including cloud, professional services and IBM partner services to expand geographic presence in the GTA. 

Dec 6 – Washington, DC based The Brydon Group acquires Hamilton, ON based Better Impact. Acquisition of volunteer management, scheduling, and engagement software provider to advance software offerings. 

Dec 9 – New York based CookUnity acquires Toronto based Cookin. Acquisition of operating system and platform provider for chefs to organize and market food businesses to expand offerings and penetrate Canadian market. 

Dec 10 – VitalHub (TSX:VHI) acquires Calgary based Strata Health Solutions. $32.3MM acquisition of software provider of patient flow access and navigation with ARR of $12.3MM to extend electronic referral market solutions. 

Dec 10 – A group of British Columbia investors acquired Montreal based Jobwings.com Careers oa Jobs.ca. Acquisition of online recruiting firm by a group of tech entrepreneurs. 

Dec 10 – New York based Pomeroy Technologies acquires Woodbridge, ON based Soroc Technology. Acquisition of full-service technology solutions and services provider to expand North American presence and to increase service delivery capabilities. 

Dec 11 – CGI (TSX:GIB-A) acquires St. Louis based Daugherty. Acquisition of professional services firm specializing in artificial intelligence, data analytics, strategic IT consulting, and business advisory services for Fortune 500 clients in the financial services, healthcare, communications, retail and manufacturing sectors with over 1,100 consultants to strengthen US market presence. 

Dec 11 – Montreal based Valsoft acquires New York based Exeevo. Acquisition of CRM solution provider for sales, marketing, medical, and service teams built on Microsoft technology to expand into the Life Sciences software market. 

Dec 11 – Sherbrooke, QC based Sherweb acquires Irish company MicroWarehouse. Acquisition of IT products distributor to expand market presence. 

Dec 11 – Toronto based Quantum Lifecycle Partners acquires Richmond Hill, ON based DCR Systems Group. Acquisition of technology, end-to-end IT lifecycle management and sustainable IT recycling services provider. 

Dec 12 – WELL Health Technologies (TSX:WELL) acquires two healthcare tech companies. Acquisition of two complementary, unnamed healthcare focused technology companies with over $15MM in annualized revenue. 

Dec 12 – Calgary based Absorb Software acquires Toronto based Together Software. Acquisition of mentorship software and platform provider to enhance broader learning management system and product ecosystem. 

Dec 12 – Bionoid Pharma (OTCPK:BINP) acquires Coquitlam, BC based PrimeEnduro.com. Acquisition of e-commerce platform selling supplements from Vitawin Supplements to expand e-commerce presence within the health and wellness sector. 

Dec 13 – London, ON based Paystone acquires Ackroo (TSXV:AKR). $21MM acquisition of cloud-based customer loyalty, gift card, and POS services provider to merchants to enhance payment processing solutions and to broaden scope of offerings for 3.2x TTM revenue and 8.3x TTM EBITDA. 

Dec 16 – Eden Prairie, MN based Arctic Wolf acquires the Cylance business of BlackBerry (TSX:BB). Acquisition of Cylance security business utilizing AI to detect malware and prevent cyberattacks from BlackBerry (TSX:BB). 

Dec 16 – Enghouse Systems (TSX:ENGH) acquires UK based Aculab. Acquisition of provider of on-premises and cloud-based communications and AI software solutions to expand gateway business and enhance AI offerings.

Dec 16 – Healwell AI (TSX:AIDX) acquires New Zealand based Orion Health Holdings. Acquisition of subscription license and services revenue business serving marquee public sector clients globally with data interoperability and healthcare navigation products and services. 

Dec 17 – Toronto based LXT acquires German firm clickworker. Acquisition of global provider of crowdsource data leveraging automated technology platform and crowd of over six million freelancers to enhance AI data solutions.

Dec 17 – Trane Technologies (NYSE:TT) acquires Montreal based BrainBox AI. Acquisition of autonomous HVAC controls and generative Artificial Intelligence (AI) building technology provider to advance building management and digital capabilities.

Dec 19 – Management acquires Banxa Holdings (TSXV:BNXA). Going-private management buyout of crypto within payment platform infrastructure provider.

Dec 19 – Little Fish Acquisition I (TSXV:LILL-P) acquires Pitt Meadows, BC based Sequoia Digital. Acquisition of bitcoin mining data centre operator in Sherbrooke, QC with the combined entity to be rebranded as Sequoia post-closing.

Dec 23 – Fiserv (NYSE:FI) acquires Payfare (TSX:PAY). $201.5MM acquisition of earned wage access company offering instant access to earnings and digital banking solutions for workforces, with offer price representing a 90% premium over last closing price on Dec. 20.

Dec 31 – Henderson, NV based Employer.com acquires Vancouver based Bench Accounting. Acquisition of accounting startup providing bookkeeping services for small enterprises to broaden service offerings.

Dec 31 – St. Louis, MO based World Wide Technology Holding acquires Toronto based Softchoice. $1.8B all-cash acquisition of software and cloud-focused IT solutions provider to enhance software, cloud, cybersecurity and AI offerings.