Relief is finally in sight for Canada’s tech sector with the decision to extend the time companies have to mount a defence against hostile foreign takeovers. An advocacy campaign led by the Information Technology Association of Canada will almost certainly result in an extension from the current 35 days to 120 days, once consultations by Canadian Securities Administrators is complete.
The quality of Canadian technology is world class but it’s also substantially undervalued. As a result, over the past several years, hundreds of promising Canadian tech firms have been short circuited in their growth aspirations by deep-pocketed foreign companies and private equity funds scouring the landscape for attractive acquisitions. Not only does Canada lose most of the functions of these companies, it eliminates the training ground for a new generation of managerial talent — a commodity that’s in desperately short supply.
The additional 85 days gives boards of directors precious time to determine the value of a takeover bid and seek alternate bidders. But ITAC president and CEO Karna Gupta is quick to add that the change — while welcome — is not a panacea for what ails Canadian high tech. Major challenges remain in the areas of access to capital, C-suite talent and global markets that will require a lot of hard work by all players in the high-tech ecosystem.
The goal of growing more large, globally focused tech firms remains a critical objective in need of forceful, articulate policies and programs. Arming growing firms with more time to fend off foreign acquisitions is a necessary first step.