Fears that foreign companies are buying up all the Canadian high-tech companies are unfounded, according to the CATAAlliance.
“In three of the past five years, Canadian software companies acquired more foreign ones than foreigners acquired Canadians,” said David Paterson, director of public affairs for the alliance.
In two of those years, 2001 and 2003, the value of foreign companies acquired exceeded the value of the Canadian ones bought by foreigners, said Paterson.
Paterson has been collecting data on mergers and acquisitions in the Canadian software and computer services industry since 1987.
“High-tech acquisitions are very much a two-way street,” said Paterson.
A new study by Statistics Canada, Cross-border Acquisitions: A Canadian Perspective, shows an even stronger balance in favour of Canada on the hardware side.
Canadian companies in the electrical and electronic components industry made 86 foreign acquisitions valued at $53.8 billion in the years 1997-2002. Foreigners acquired only 62 Canadian companies worth $30.6 billion.
The key to the Canadian acquisition drive, according to Paterson, is Canada’s high-tech winners. “What is needed are more business leaders with the drive and acumen to create global companies.”
Acquisitions have played a critical role in the growth of Canada’s software industry leaders, said Paterson.
“Time to market is the driver. It is much faster and easier to buy a new product, or buy an existing player in a new geographical area, than it is to build from scratch. It is a strategy that works just as well for Canadian high-tech companies as it does for foreign ones.”
Financing is regarded as the second-biggest problem, after marketing, facing small high-tech firms, said John Reid, president of the Canadian Advanced Technology Alliance (CATAAlliance).
“There is no silver bullet, but everyone, in finance, government and high tech, must work together to ease access to capital,” Reid said.
CATAAlliance is a business development association with a mandate to help Canadian organizations develop into world-class producers and users of advanced technology.
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