Increased emphasis on due diligence.
Cybersecurity must haves:
Buyers demonstrated patience and more discipline in sticking to robust, and often slow, due diligence processes particularly with respect to financial sustainability.
Focus on cash flow generating opportunities.
This was accurate, though not as expected. We predicted a wave of insolvencies resulting from technology companies depleting cash runway without the near-term prospects of cash flow to attract new investment. Those insolvencies did not materialize on any significant scale. Where we did see this manifest is in the patience shown by investors in putting significant money into AI-related companies that will take time to ripen as the large language models (LLMs) that power them continue to be built and refined by larger players. Cash is certainly beginning to flow into AI companies, but not at the rate to match the AI-hype.
New technologies will shine.
In 2023, AI was everything, everywhere, all at once – except when it came to actual dealmaking, which was measured. Keep an eye on this one in 2024.
Lower and slower deal volume.
This was our most accurate prediction. The volume of technology M&A deals in Canada are much lower than the 2020-2022 highs and lag behind pre-COVID deal volumes.
New companies and subsectors will emerge.
It’s too soon to tell on this prediction; however, since the wave of anticipated insolvencies didn’t happen, there was relatively less disruption and disposition of assets that may be repurposed in a new field.
Increased competition and foreign investment scrutiny.
Competition/antitrust and foreign investment regulation risk was more pronounced in 2023. We saw substantial amendments to both the Canadian Competition Act and Investment Canada Act, which give the federal government more ways to intervene in deal making.
Normalizing privacy risk and cyber risk mitigation.
While cyber and privacy matters attracted more attention in due diligence, it would be misleading to say that there was any significant effect on deal terms.
