NEW INDUSTRY REPORT – Roll-Up Strategies in the Canadian ICT Industry

eResearch is pleased to publish an Industry Report on “Roll-Up Strategies in the Canadian ICT Industry; Your Guide to Understanding and Investing in M&A-Focused Public Companies”.

You can download our 22-page Industry Report by clicking on the following link: eR-Industry_Report-ICT-M&A-2023-10-30-FINAL

Various companies in the Canadian market focus on a Mergers and Acquisition (M&A) roll-up strategy, concentrating their efforts within the Information and Communication Technology (ICT) industry.

The ICT industry encompasses various technologies and services related to information processing, communication, and data management. It plays a crucial role in modern society and business, driving innovation and enabling the exchange of information globally.

Core components include cybersecurity, data management, digital media, electronics, hardware, internet services, IT services, networking, software, and telecommunications.

In this report, we provide a brief overview of the ICT industry and companies in Canada that are executing an M&A roll-up strategy as part of their core business strategy.

REPORT HIGHLIGHTS:

• Despite the COVID-19 impact, the global ICT industry was resilient. Estimated worldwide ICT spending in 2023 is estimated at US$4.8 trillion. Canada has a robust ICT sector and it is expected to reach $270 billion in revenues in 2023, growing 5% annually.
• A roll-up strategy within M&A aims to consolidate businesses in the same sector, enhancing efficiency, competitiveness, and scale.
• Post-COVID-19, M&A activity in Canada saw a resurgence in 2021, recording over US$349 billion in deals, a yearly jump of over 135%.
• Early 2023 showed a dip in M&A deal value due to economic uncertainties, but the second quarter of 2023 showed improvements.
• In Canada, there is a potential for increased M&A activity influenced by technological demands and the aging demographic of Canadian entrepreneurs.
• Public companies mentioned in the report include:
  • Ciscom Corp. (CSE: CISC)
  • CGI Inc. (TSX: GIB.A | NYSE: GIB | LSE: 0A18 | FSE: CJ5A)
  • Constellation Software Inc. (TSX: CSU | OTC: CNSWF | FSE: W9C)
  • Converge Technology Solutions Corp. (TSX: CTS | OTC: CTSDF | FSE: 0ZB)
  • Descartes Systems Group Inc. (TSX: DSG | NASDAQ: DSGX | FSE: DC2)
  • Docebo Inc. (TSX: DCBO | NASDAQ: DCBO)
  • Dye & Durham Ltd. (TSX: DND | OTC: DYNDF)
  • Enghouse Systems Ltd. (TSX: ENGH | FSE:3E4 | OTC: EGHSF)
  • Kinaxis Inc. (TSX: KXS | FSE: 9KX | OTC: KSXCF)
  • Lightspeed Commerce Inc. (TSX: LSPD | NYSE: LSPD)
  • Open Text Corp. (TSX: OTEX | NASDAQ: OTEX | FSE: OTX)
• Company Spotlight – Ciscom Corp. (CSE: CISC)
  • The report highlights Ciscom which recently went public and focuses on acquisitions in the ICT sector.
  • Ciscom plans to acquire Small and Medium-sized Enterprises (SMEs) with strong growth potential and proven historical profitability.
  • It typically targets independent ICT businesses with revenue ranging from $10 million to $30 million per year (excluding COVID-19 impacts) and a history of positive cash flow.
  • Ciscom employs a blend of cash and shares for its acquisition strategy. This approach provides sellers with a favorable exit opportunity at a fair valuation, and some immediate liquidity with the cash component but also offers the potential for long-term value growth through ownership in the combined entity.
  • Ciscom completed its first two acquisitions in 2022 and is expected to book at least $35 million of revenue in 2023, up from $14.8 million in 2022.

FIGURE 1: ICT Sector

You can download our 22-page Industry Report by clicking on the following link: eR-Industry_Report-ICT-M&A-2023-10-30-FINAL

FIGURE 2: Publicly-Traded Comps

Notes: All numbers in CAD unless otherwise stated. The author of this report, and employees, consultants, and family of eResearch may own stock positions in companies mentioned in this article and may have been paid by a company mentioned in the article or research report. eResearch offers no representations or warranties that any of the information contained in this article is accurate or complete. Articles on eresearch.com are provided for general informational purposes only and do not constitute financial, investment, tax, legal, or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this information should consult with a financial advisor. The article may contain “forward-looking statements” within the meaning of applicable securities legislation. Forward-looking statements are based on the opinions and assumptions of the Company’s management as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein. Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Please read eResearch’s full disclaimer.