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in March 2023, further increasing what was
already a lag in M&A.
Despite that turbulence, LeBlanc-
Lapointe says certain tech subcategories
– artificial intelligence, clean tech, crit-
ical minerals, and renewables – attracted
interest from investors and acquirers in
2023, a trend likely to continue into 2024.
Government interest in the tech sector
will also help, including a new federal clean
tech investment tax credit and a tech talent
strateg y to address the scarcity of highly
skilled workers. She says such initiatives will
help "nurture attractive M&A targets."
She adds there will also be more talent-
driven M&A – or "acquihires" – allowing a
buyer to gain another company's employees
to fill talent gaps.
LeBlanc-Lapointe concludes that 2024
"could be an exciting year in Canadian tech
M&A," especially in the small-to-mid-cap
space, where players have spent the last few
years on the sidelines. Market conditions
will favour tech buyers with solid balance
sheets and "strategic" buyers from other
sectors looking to leverage technolog y in
their operations or offerings.
While prospective sellers in the tech
sector have been waiting for the high valua-
tions of a couple of years ago to return, they
may now be willing to accept lower, "more
realistic" valuations because they may no
longer have the cash flow with limited
access to venture capital.
Artificial intelligence will figure signifi-
cantly in tech M&A activity, says LeBlanc-
Lapointe, but not only among companies
with AI capabilities as buyers and sellers.
"In a general sense, buyers in various sectors
are starting to leverage AI in their internal
processes to source targets, evaluate them,
and then conduct due diligence."
Aaron Atkinson, a partner in the Toronto
office at Davies Ward Phillips and Vineberg
LLP, observes that the results for M&A in
2023 were "probably better than what people
thought at the beginning of the year." e
same is likely to happen again in 2024.
However, uncertainty remains. While
central banks, including the Bank of Canada,
have indicated that rate cuts should be coming
