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Canada Groundview: top 10 M&A cities, key trends and issues

by Abby Roberts

Sean Dainty was born and raised in Toronto and recently returned to lead the Merrill team. Before Canada, he covered the UK and Ireland for Merrill since 2014.

Q. What local M&A trends are you seeing?

Canadian M&A jumped 15% in volume to a 12-year high in 2018. This year, we continue to see robust activity, driven by Toronto’s booming technology market, the recent legalization of cannabis, strong natural resources activity, a hot real estate sector, and Chinese foreign investment. 

Toronto is attracting top technology talent from around the world. The government has put policies in place to sponsor individuals like software engineers with rapid visa processes of two to four weeks. As a result, we expect the technology sector to keep growing, spurring fundraising and M&A events.

Canada M&A Activity at a glance

Figure 1. DatasiteOne activity March 2018-2019

Figure 2. Activity by top 10 locations

Q. What are some data room best practices you’d recommend? 

Whether a banker, lawyer or corporate, the most successful clients I’ve seen on both the buy- and sell-side have a consistent process for when a deal arises. As a result, opening the data room isn’t a fire drill.

For instance, top dealmakers will keep up-to-date deal documents in one place that is easily accessible by the team. Obviously, that’s a service DatasiteOne provides, but it’s something that should be done regardless of technology provider. 

Time to prepare for the go-live also is critical. Often, a banker or lawyer will call us up and say we need to go-live by next Monday; that’s not realistic and you’ll run into issues. Best practice is to ensure you leave a significant amount of prep time and engage us earlier in the process, so you’re not in a reactive state and can run the deal more efficiently.

Most people don’t realize how much time using the due diligence app ahead of the go-live can save them. Leveraging search to double-check documents, using an index that tracks to your checklists, and keeping key deal documents in the sandbox rather than digging things up constantly on email or hard drive is invaluable. 

Finally, choose your due diligence app the same way you pick any other advisor. Corporates and private equity typically review an advisor’s credentials, network, talent, and fee structure. Similarly, your selection criteria should include credentials, technology, service, and cost. 

Q. What do clients like most about DatasiteOne?

Credibility and reliability are fundamental. Clients want a tested market leader who’s worked with most major companies across every sector.

Our project management team also really helps clients. Everyone says they have 24/7 service, but usually, that means external call centers and third-party providers. With DatasiteOne, there’s no voice mail, we reply to every email within ten minutes, and we do the work for you, if needed. Having someone on call who will add users or do other tasks for you makes a big difference. Other providers will charge you additional money for that kind of service.

That customer-first approach extends to our technology platform. We’ve invested a ton of money in ensuring our technology makes clients’ lives easier, not harder. For instance, bulk edits let them change the entire index in a matter of minutes. On another platform, it’d take hours. When you compound those small differences over the course of a deal, you end up with a week’s worth of time saved.

Adding to that is our OCR search capability. No one else can make a 100 file types scannable. Here’s a real-life story of why that matters. A client was asked to find every contract with a specific clause across 2,000 purchase agreements. Because of our search capability, he could get that list within 15 minutes. With another platform, it would have taken two days and another associate’s time. So that’s 40 hours versus 15 minutes for one request.

Finally, the whole reason to use DatasiteOne is to make your security bulletproof. And by security, I don’t just mean external ISO compliance, but internal controls as well. For instance, making sure user permissions are set up properly and mistakes are minimized if not eliminated. It’s an important consideration, because I have seen people fired over permission glitches that resulted in a collapsed deal or bad result.