Canadian Private Market Recap: Apr 8

  • Posted By: Ann Zhang, Paris Aden & Anan Sivapalu

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Market Update

The equity and credit markets continue to indicate significant liquidity in the system to underpin M&A activity.  Valuation multiples remain near 10-year highs, while market volatility and bond yields remain near historic lows.

The North American equity markets declined last week as a result of general global economic weakness. OPEC’s myopic brinkmanship and Federal Reserve’s go-slow policy have added volatility to markets. Despite the transitional decline seen last week, the U.S. equity markets remain near their cyclical highs.

Mid-market credit conditions have stabilized with higher spreads than seen in the prior year and the 5x leverage levels in the mid-markets are congruent with historical credit booms.




Change From

U.S. Middle Market Loans

This Week

Last Week

Year Ago


Last Week

Year Ago









New Issue Clearing Yield ≤ $50 million








Spread to Treasury

541 bps

553 bps

390 bps


-12 bps

+151 bps


Total Debt/EBITDA













Over the past month, U.S. corporate cash balances have remained at approximately $5.7 trillion, while Canadian corporate cash balances increased almost 3% from $1.58 trillion to $1.62 trillion.

(US$ in billions)

Rolling 90 Days Ended

Change From

Aggregate Corporate Cash  













S&P 500 Constituents







TSX Composite Constituents












Valitas Insights: In Private Equity Dealmaking, Sellers Remain in the Driver's Seat

The April 7 edition of the daily PitchBook Newsletter had some very interesting analysis on the U.S. Private Equity market. Here is an excerpt (we have added formatting for emphasis):

"The current private equity dealmaking environment is dynamic, marked by several key factors that may seem at odds with the economic landscape. It is counterintuitive to think that there is a liquidity surplus of both debt and equity capital. Not only are there plenty of funds available, interest is strong from all lender/investor constituencies. Companies with solid operational profiles and sound financial reporting are being well received by all funding sources"

"The senior debt market has eased, with aggressive competition from banks and non-bank lenders..." 

"There is also excess capital in the PE market as the window appears to be closing for various general partners to invest a significant portion of their “dry powder” that accounts for the approximate $543 billion capital overhang in the U.S., according to PitchBook. In short, if you are an active buyer (strategic or financial) looking for an attractive, well-performing company in today’s marketplace, it is likely to be an extremely competitive process as sellers are in the driver’s seat."

The following charts, which we derived from data provided in the PitchBook report, illustrate the valuation trends, the significant valuation premium for larger companies and total leverage levels over time for the U.S. private equity market.

Valuation multiples have generally been increasing over the last four years. As always, there has been a significant valuation premium for larger deals. For example, on average the valuation multiples for deals over $250 million are double those for deals under $25 million.

Median U.S. leverage levels on private equity buyouts have remained remarkably stable at 55% over the corresponding 4-year, 1-year and last quarter periods.  The leverage levels also does not appear to vary much by deal size.  Canadian credit market dynamics are different, for more information on Canadian credit market conditions, contact us.

To view the full PitchBook report, click here.


Business Transitions Forum in Toronto on June 8: Maintaining Confidentiality During a Competitive Sale Process

The most successful transactions are those that bring the “outlier” to the surface, that one acquirer or investor who sees more value in a business than any of the others. It’s often difficult to identify the outlier, it is essential that multiple parties be contacted through a structured sale process to uncover outliers. To keep bidders honest, the competitive tension between bidders should be palpable.

How do you run a competitive sale process under the radar without information leaks to employees, customers or suppliers? How do you protect yourself against potential competitors using information gained through the due diligence process against you in the marketplace? What strategies come into play when speaking to different potential buyers concurrently and how can business owners manage the complexity of a confidential sale process? At what stage should personnel within and outside your organization be made aware of the bigger picture? What do you say (and do) if there is a leak? How should the announcement be made when the deal is finalized? What role can you expect your senior management, board, advisors and the rest of your employees to play?

Paris Aden is moderating a panel discussion at the Business Transitions Forum Program in Toronto on June 8th.  The panelists include some of Canada’s leading M&A professionals:

Harry Blum, Managing Partner, Collins Barrow Toronto LLP

Curtis Cusinato, Partner, Stikeman Elliott LLP

Tim Morton, Managing Partner and Founder, Prompta Consulting Group

This panel will discuss the best practices and protocols that they use to maintain strict transaction confidentiality for their clients during the process.  They will also discuss when and how the deal is best communicated to key stakeholders.  We look forward to seeing you there.


Weekly Canadian Private Market M&A Report

Announced Deals

GuestLogix to sell OpenJaw to TravelSky Technology

GuestLogix Inc. (TSX: GXI), which earlier this year obtained creditor protection, has agreed to sell its interest in OpenJaw Technologies Inc. to China’s TravelSky Technology Ltd.. No financial terms were disclosed for the sale. Toronto-based GuestLogix is a provider of merchandising, payment, and business intelligence technology to the passenger travel industry. The OpenJaw Transaction is subject to the approval of the Ontario Superior Court of Justice (the “Court”).

Wafra Partners sells Century Fire Protection to FirstService

FirstService Corp. (TSX, NASDAQ: FSV), a Canadian outsourced property services provider, has acquired Century Fire Protection, a Duluth, Georgia-based fire and life safety services company operating in the southeastern region of the United States. No financial terms were released. “Century is an important strategic acquisition that complements our existing operations and expands our services capabilities,” said Scott Patterson, CEO of FirstService. “Fire protection shares similar attractive characteristics with our other service platforms: it is an essential service in a large, highly fragmented market subject to increasing regulation which supports recurring, contractual revenue and robust industry growth. With its leadership position and reputation for service excellence, Century is poised to capitalize on the significant market opportunity.”

Closed Deals

Real Matters raises $100 million, acquires Linear Title & Closing

Canadian real estate technology platform Real Matters announced that an affiliate of the company has bought U.S.-based title search specialist Linear Title & Closing Ltd. for up to US$96 million. Following the transaction, Real Matters is now a top-five independent provider of mortgage title and closing services in America. This transaction will also allow Real Matters to generate 95 percent of its revenue in the United States.

Blue Point Capital’s Shnier-Gesco buys Tierra Sol Ceramic Tile

Shnier-GESCO LP, a portfolio company of U.S. private equity firm Blue Point Capital Partners, has acquired Tierra Sol Ceramic Tile Ltd., a Canadian distributor of ceramic and porcelain tile, glass and metal accents, and natural stone products. No financial terms were disclosed. Chip Chaikin, a partner with Blue Point, commented on the deal, “Shnier excels at marketing, selling and distributing a broad range of licensed and proprietary branded flooring products to multiple customer channels. Tierra Sol is highly focused on the fast-growing ceramic category, with particular strength in western Canada and the northwestern United States. The combination of the two companies will allow GESCO to reach a larger customer base with an extended product and service offering. The combination is terrific.”

Bridge Growth Partners acquires VC-backed Solace Systems

U.S. private equity firm Bridge Growth Partners has acquired a majority stake in Solace Systems Inc., a Canadian provider of infrastructure messaging technology. No financial terms were released for the deal. Tom Manley, Senior Principal of Bridge Growth Partners said, “Together, we will focus on helping Solace accelerate growth by further investing in its go to market strategies, building a rich ecosystem with leading alliance partners, and leveraging the company’s proven and innovative technology. We believe Solace is well positioned to capitalize on the growing demands being placed on technology infrastructure, driven by rapid movement to the cloud and the influx of Big Data and the Internet of Things.”

Parallel49-backed Avison Young buys Arizona’s GPE Companies

Avison Young Inc. has acquired Phoenix, Arizona-based GPE Management Services LLC and GPE Commercial Advisors LLC, which together do business as the GPE Companies. No financial terms were released. “We are pleased to be opening our first office in Phoenix. The acquisition of GPE provides Avison Young with a strong foundation, particularly in terms of brokerage and property management, in Arizona as we begin to roll out our expansion program in the state,” commented by Mark E. Rose, Chair and CEO of Avison Young.

Nautic Partners-backed IPS acquires Integra Adhesives

IPS Corp, a Compton, California-based producer of specialty adhesives, solvent cements, and specialized plumbing products, has acquired Integra Adhesives from its founder Doug Turner and other shareholders. No financial terms were released. John Reeves, President of the SCIGRIP division of IPS, said, “We are excited to welcome Integra into the IPS family and to continue Integra’s tradition of excellence in quality, R&D, and service. Having joined forces with Integra, we will be even better positioned to serve our valued customers and improve our product offerings to the marketplace for structural and specialty adhesives.”

Vista closes buy of OTPP-backed BRG’s action sports unit

Vista Outdoor Inc. has closed its acquisition of BRG Sports’ action sports division. The US$400 million deal, announced in February, gives Vista some of BRG’s leading market brands. Vista Outdoor’s Chairman and Chief Executive Officer Mark DeYoung said, “The newly acquired brands strengthen our ability to provide a broad suite of innovative, high-quality products to specialty outdoor shops, wholesalers and leading outdoor product retailers. Combined with CamelBak and Bollé, the Action Sports brands position Vista Outdoor as the leader in cycling and snow sports equipment in North America and Europe. We are committed to the successful integration of Action Sports and the continued execution of our strategic growth strategy.”

FIMI-backed Magal Security Systems acquires Aimetis

Senstar Corp, an affiliate of Magal Security Systems Ltd. (NASDAQ GM: MAGS), has acquired Aimetis Corp., a Waterloo, Ontario-based intelligent video management software company. The deal valued Aimetis at US$14 million ($18.3 million). Saar Koursh, CEO of Magal, commented, “Aimetis’ product portfolio is highly complementary to Senstar’s large portfolio of perimeter intrusion detection systems (PIDS), adding a state of the art video surveillance offering with unmatched solutions for outdoor and critical sites. The acquisition expands the product portfolio by about 20%, and diversifies our offering into new markets such as education, health care and retail. Aimetis is a fast growing company, and we expect the acquisition to be increasingly accretive to Magal from 2017, with no significant effect on the bottom line in 2016.”

Dimension Data acquires Eventi Capital-backed Ceryx

South Africa’s Dimension Data has acquired Ceryx Inc., a Canadian managed information technology services company focused on cloud-based messaging and collaboration solutions primarily for North American enterprises. The deal’s financial terms were not disclosed. Ettienne Reinecke, Dimension Data’s Group CTO said, “We’ve seen strong adoption of our private cloud offering for Exchange, Sharepoint and Skype for Business. This strategic acquisition fast tracks Dimension Data’s hybrid offering, and positions the combined entities as one of the few companies globally that can offer the full suite of different delivery models that allows organisations to provision, manage and optimise these workloads through single management portal, irrespective of platform or location.”

Birch wraps up acquisition of PE-backed Primus Canada

Birch Communications Inc. has closed its previously announced acquisition of select assets and customers of Primus Telecommunications Canada Inc., an Etobicoke, Ont.-based telecommunications and cloud service provider. The deal’s financial terms were not disclosed. Vincent Oddo, President and CEO at Birch, commented on the deal, “Primus is a great strategic fit as we work toward our goal of growing our service footprint to international markets. As a whole, our entire customer base will benefit from Birch’s new, larger territory reach and robust product offerings.”


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