Blog

Canadian Private Market Recap: Nov 27

  • Posted By: Anan Sivapalu

  • |
  • Comments: 0

Market Update

Capital markets remain conducive to M&A activity.  Last week North American markets were unchanged with 95%+ of the S&P 500 companies reporting Q3 results. However, the Russell 2000 rose by 2.3%, indicating a rotation into small capitalization stocks. The brick and motor store sales from Black Friday are expected to be lower compared to last year as consumers move toward online discount retailers. Credit conditions remain favorable.

 

 

Close

 

Change From

Capital Markets

 

This Week

Last Week

Year Ago

 

Last Week

Year Ago

Equity Markets

 

 

 

 

 

 

 

S&P 500 Composite

 

2,090

2,089

2,073

 

+0.0%

+0.8%

 

TEV/Forward EBITDA

 

10.2x

10.2x

9.8x

 

+0.0x

+0.5x

TSX Composite

 

13,368

13,433

14,922

 

-0.5%

-10.4%

 

TEV/Forward EBITDA

 

9.6x

9.6x

8.7x

 

+0.0x

+0.9x

Russell 2000 Index

 

1,202

1,175

1,191

 

+2.3%

+1.0%

 

TEV/Forward EBITDA

 

10.6x

10.4x

9.9x

 

+0.2x

+0.6x

CBOE VIX ("Fear Index")

 

15.1

15.5

12.1

 

-2.3%

+25.3%

USD/CAD

 

0.748

0.750

0.881

 

-0.001

-0.132

 

 

 

 

 

 

 

 

 

Debt Markets

 

 

 

 

 

 

 

U.S. 10-Year Treasury Yield

 

2.2%

2.3%

2.2%

 

-0.0%

-0.0%

U.S. Middle Market Loans

 

 

 

 

 

 

 

 

New Issue Clearing Yield ≤ $50 million

 

6.6%

6.6%

6.4%

 

0.0%

+0.2%

 

Spread to Treasury

 

437 bps

433 bps

418 bps

 

+4 bps

+19 bps

 

Total Debt/EBITDA

 

5.8x

5.8x

4.5x

 

0.0x

+1.3x

Source: Capital IQ

In a longer term context, the North American capital markets and equity valuations remain near cyclical highs, while U.S. treasury rates and the Canadian dollar are relatively low.



North American M&A activity and dollar volume have been mixed.  Weak commodity markets and a weaker Canadian dollar have been a catalyst for Canadian M&A activity, particularly with larger transactions. In the U.S., activity is moderating while the average transaction size has increased.

 

 

Rolling 90 Days Ended

 

Change From

M&A Market Fundamentals

 

10/31/2015

9/30/2015

10/31/2014

 

9/30/2015

10/31/2014

Number of Transactions

 

 

 

 

 

 

 

 

Canada

 

127

110

143

 

+15.5%

-11.2%

 

U.S.

 

1,203

1,313

1,575

 

-8.4%

-23.6%

 

Canada % of Total

 

9.5%

7.7%

8.3%

 

+1.8%

+1.2%

 

 

 

 

 

 

 

 

 

Dollar Volume (US$ in billions)

 

 

 

 

 

 

 

 

Canada

 

38,739

36,571

15,576

 

+5.9%

+148.7%

 

U.S.

 

302,089

345,570

239,120

 

-12.6%

+26.3%

 

Canada % of Total

 

11.4%

9.6%

6.1%

 

+1.8%

+5.3%

 

 

 

 

 

 

 

 

 

Aggregate Corporate Cash (US$ in billions)

 

 

 

 

 

 

S&P 500 Constituents

 

           6,059

           6,061

           5,861

 

-0.0%

+3.4%

 

TSX Composite Constituents

 

           1,574

           1,574

           1,362

 

0.0%

+15.6%

Source: Capital IQ

There is tremendous liquidity available to underpin M&A activity.  Corporate cash balances in North America have increased to US$7.6 trillion from US$7.2 trillion a year ago. On the private equity and venture capital front, the equity capital overhang is estimated at US$535 billion. 

 

 

 

Close

 

 

Change From

Private Equity Overhang (US$ in billions)

 

2014  1H

2013 2H

2012 2H

 

2013 2H

2012 2H

North America

 

$535

$486

$519

 

+10.1%

+3.1%

Source: PitchBook

 

Weekly Canadian Private Market M&A Report

§  Playerize Network acquired by Perk.com

§  Vasco closes acquisition of Silanis

§  Univalor trades IP assets for share capital in CogniSens

§  SmartReno buys Zoomission

§  Courion acquires SecureReset
 

Playerize Network acquired by Perk.com

Playerize Network, a venture backed firm and SuperRewards owner was acquired by Perk.com. The SuperRewards platform facilitates alternative payments, virtual rewards and monetization capabilities.  
“We are pleased to complete the acquisition of SuperRewards, which will expand our rewards platform beyond Perk Points to include alternative payments and virtual rewards,” said Ted Hastings, CEO of Perks. Jeff Magnusson, Co-CEO of SuperRewards added, “We are excited to be a part of a leading mobile rewards platform and look forward to a long successful partnership.” The acquisition was funded by a cash payment of US$350,000 and the issuance of 455,000 Perks.com shares, with an additional common 320,000 share issuance subject to 12-months post-closing performance.  

Vasco closes acquisition of Silanis

Vasco Data Security International has acquired Silanis Technologie Inc., a portfolio company of Georgian Partners, for $113 million. Silanis is a Canadian electronic signature and digital transaction solutions provider. SilaniseSignLiveTM is used by large banks insurers and government agencies. “The addition of eSignLive is a natural extension of our commitment to secure and facilitate online transactions via the web and mobile devices as more businesses, particularly financial institutions, seek innovative ways to improve the customer experience and achieve cost savings,” said Kendall Hunt, CEO of VASCO.

Univalor trades IP assets for share capital in CogniSens

CongniSens, a Montreal-based company specializing in the application of cognitive enhancement technologies, acquired intellectual property assets from Univalor. Jean Castonguay, the CEO of CongniSens stated, “Our company’s growth is attributed to an increased awareness of the market relevance of our unique technologies. This transaction will enable us to expand our commercialization and distribution in all of our markets. It will also allow us to further our partnerships with military and sports performance market leaders as well as with prominent health and wellness research centers.” The acquisition was financed with CongniSens shares.

SmartReno buys Zoomission

Montreal-based SmartReno has acquired a local competitor, Zoomission. Financial details of the transaction were not released. The SmartReno platform connects homeowners with contractors. The platform handles 40,000 project requests totaling $200 million in value per year.   Only the highest quality contractors are kept in the SmartReno network. it currently maintains over 5,000 contractors across Canada. “SmartReno definitely has the resources and the leadership it needs to build a successful company on a strong foundation. The Internet is an integral part of our daily lives now, even for construction and renovation projects. It’s something SmartReno understood years ago and it’s why we put our trust in them. Today SmartReno is considered essential to renovation in Canada, and their business model isn’t just innovative, it can be exported internationally,” said Martin-Luc Archambault, an angel investor.

Courion acquires SecureReset

Curion Corp., a leading provider of Identity Governance and Administration platform has acquired SecureReset. Curion is responsible for managing over 10 million identities with over 600 clients. The latest acquisition will enable Curion to extend its technological platform to include multi-factor authentication solution for enterprise password reset. Andy Osburn, founder of SecureReset stated, “As part of the Courion family, we will be able to keep even more enterprises secure. Adding our technology to Courion will help to ensure Courion’s continued market leadership in information security.”

Add A Comment

Confidentiality and Communications Protocols

Continue Reading

Sign Up to Receive Valitas Publications

Subscribe