Quebec Transaction Snapshot

Third quarter 2016

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Now What?

With the uncertainty of the US Presidential elections behind us, “Now what?” is the question everyone is asking. While the question is far-reaching and covers concerns related to foreign policy, employment, fiscal policy, spending on healthcare, education and infrastructure, Quebecers are primarily concerned about the potential impact on trade relations with our single largest business partner, as well as the overall impact that the new Republican regime will have on the US economy in the next four years. In this context, most would argue that while the election results are now confirmed, significant uncertainty remains.

Transaction activity in Quebec during the months leading up to the 8 November 2016 US Presidential elections was very consistent quarter over quarter; however muted in terms of both transaction volume and deal value when compared to the first three quarters of 2015. More specifically, Q3-2016 reported 81 closed deals in Quebec, consistent with the 79 and 82 reported in Q1 and Q2, respectively. However, this is significantly lower than the average of 94 deals per quarter reported through Q3-2015. Similarly, reported transaction value during Q3-2016 was just $2.6B, down from $3.9B in Q2-2016, and well below the average of $11.5B during the last eight quarters.

Private equity investing in Quebec is also on the decline, with only 7 deals closed during Q3-2016 compared to 10 in Q2-2016, and an average of 10 during the last 8 quarters. According to data recently released by the Canadian Venture Capital Association and Reseau Capital, year-over-year private equity investment in Quebec as at Q3-2016 dropped by more than 50% to $2.3B, and the average deal size shrunk by 59% to just $16.4M. It should also be noted that 6 of the top 10 year-to-date private equity investors in the province were Quebec-based institutions. Trends across the country were similar, as only $9B was invested in 271 deals, down 55% from the same time last year, when $20B was invested in 311 deals. Moreover, year-to-date exits were only $3.5B compared to $11.0B during the same period in 2015, and year-to-date fundraising was also 25% lower at $4.7B.

Notwithstanding the above, we are continuing to see a significant amount of transaction activity in the Quebec mid-market on both the buy-side and sell-side, in addition to a noted uptick in financings. We closed no fewer than 4 deals during Q3-2016, 3 of which you will read about in this edition, including the sale of a minority interest in Accès Location d’Équipement to the Fonds Régionaux de Solidarité FTQ, the sale of Plastube (a portfolio company of CAI Private Equity) to BDG & Partners, and the sale of Groupe Équilibrum to Médi Baie inc.

In this edition, you will also read about the Entrepreneur Of The Year winners across all categories in the province of Quebec, including Gilbert Rozon of Just for Laughs, who was named the EY Entrepreneur Of The Year for Quebec and who will now be competing for the national title and the opportunity to represent Canada on the world stage in Monte Carlo in early 2017 as part of the global finals.

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I hope you enjoy this edition and those that follow,

Todd Caluori

Todd Caluori, CPA, CA, CBV
Editor and Associate Partner, M&A Lead Advisory 

Download  Quebec Transaction Snapshot Q2 2016 as a printable document

 

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Quebec Transaction Snapshot Q3 2016
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