Canadian tech M&A: Looking ahead to 2025

Though it takes time to become profitable, there should be a clear path to profitability from the outset, even if that path has to be adjusted from time to time. It is also critical to build a strong leadership team that focusses on employee retention and company culture, as potential buyers are always looking for stability.

Though protecting intellectual property with patents and trademarks can be expensive for early stage companies, we nonetheless advise founders to focus on protecting their trade secrets as best as possible by only disclosing to third parties what is absolutely necessary to disclose and to ensure that every employee and contractor who works on the product at every stage of development signs the necessary acknowledgements and waivers as part of their employee and contractor agreements.

Finally, we preach to founders the importance of keeping all legal, financial, and operational documents up-to-date from the very beginning. We analogize it to building a strong foundation for your house, one which you can subsequently build on in a more substantial way as your company grows. We have seen a number of potential transactions get derailed in due diligence because basic documentation was not in place or signatures could not be obtained after the fact.

Q: What is your outlook for tech M&A activity in the coming year?

A: With economic conditions continuing to improve and interest rates continuing to drop, we expect to continue to see a robust tech M&A market in the coming year. We also expect to see private equity firms continuing to be active in this space which should also help to drive tech M&A activity in the coming year.