The technology sector in Canada has experienced significant
activity and change in recent years. With ongoing, substantial
investment from U.S. technology companies in both Canadian startups
as well as Canadian tech talent, it is becoming increasingly
important for players on both sides of the border to understand the
nuances of these Canada-U.S. cross-border transactions and what
they may say about where the Canadian tech space is headed.
Influx of U.S. inbound investment
U.S. investment continues to dominate inbound activity in
Canada's tech sector (Figure 1), averaging 76% of all inbound
M&A activity between 2015-2018. Current 2019 estimates put the
share of U.S. investors representing over 80% of all M&A deals
this year. U.S. tech investors, including from some of the largest
players in the United States, are coming into Canada as acquirors,
requiring all parties involved to focus on cross-border issues such
as tax structuring related to entering Canada.
