State of the Technology Sector

The Canadian public  technology universe has approximately 310 listings on the combined TSX and TSX Venture exchanges. Only a handful of such listings (approximately 6) would be considered large-cap companies by most institutional investors.  During any given month, there may be an additional two or three tech stocks that would fall into the mid-cap category.  The remainder of the TSX/TSX-V listed companies would be considered small-cap and micro-cap. Among this grouping, between 12 and 15 TSX technology companies have market capitalizations above $100 million, a typical investment cut-off point by most institutional investors. As a consequence, approximately 290 listed technology companies have market capitalization that falls below the investment threshold for most institutional investors.  In the meantime, exchange listed micro-cap companies have suffered from a significant liquidity crisis that has resulted in nearly 12 months of share price decline, and at best, limited interest in growth financing. With poor liquidity, many institutional intermediaries, who derive benefit from trading, have also abandoned the sector. 

Assisting Buyers and Sellers

Among the abandoned listings, there are many high-growth companies with adequate balance sheets that are currently, or will shortly be, generating cash flow from operations. Management at these companies are beginning to realize the potential benefit of consolidating smaller, underperforming, and undervalued assets in order to accelerate growth. Razor Partners helps to source, structure, and fund M&A opportunities in partnership with these companies.

Through bad timing, or underperformance, there are many companies in the Technology Sector that have weak balance sheets, limited market share, and/or decelerating growth. Although prospects may seem bleak, many of these companies retain good assets that are attractive for prospective consolidators. Razor Partners helps to find, fix, and sell these assets to interested private and publicly listed buyers.

Razor Capital Partners believes that there should be accelerated vendor consolidation within the technology sector with many listings disappearing. It is our objective to assist smart companies and investors to derive benefit from the consolidation of the Technology Sector.