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.
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