5-Bullet Friday – February 12th

Here are some of the news that have caught my attention recently:

  1.  Rona’s sale: A good deal for shareholders, a loss for Quebec’s economy, but not a strategic asset.
  2. Canada’s One-Legged Stool Economy. Relying on a frothy real estate market.
  3. Don’t shake on it.
  4. Public SaaS median valuations dropping to more reasonable levels. 
  5. 2015: An epic year for private equity sellers.

1-Rona: The sale of a Quebec retail jewel is a good deal for its shareholders, but a loss for Quebec’s economy. The province is losing another HQ, but not a strategic asset. Unlike Bombardier or Alcan, distributors like Rona are not generating as much economic value add as they are not an anchor to an entire cluster of suppliers, don’t control access to a key natural resource and have few intangibles assets (R&D, IP). Rona was an innovator (multiple store formats, service) and a serial acquirer. However, in a mature and challenging retail environment it was a matter of time before the company got acquired by a larger player. The lesson: eat or be eaten. 

2-Canada’s One-Legged Stool Economy. Relying on a frothy real estate market.

3-Don’t shake on it. Is it just me or everybody seems to be sick at this time of the year. How much longer will tradition trump health? Don’t be upset if I don’t shake your hand. Should we make it a New Year’s resolution?

4-Public SaaS median valuations dropping across the board: 57% below 01/14 high. From 7.7x to 3.3x forward revenues. 

5- 2015 was an epic year for private equity sellers. Neat summary of the state of the U.S. PE market in 10 charts. 

About Ludovic Dumas

Ludovic transforms innovative companies into world-class organizations. He is an investment professional at an investment firm representing the interests of one of the most successful families in Canadian business. Before joining the private equity world, Ludovic was an investment banker at CIBC and with ING Group’s investment banking team in Frankfurt, Germany. Mr. Dumas was also a management consultant with Deloitte where he worked on corporate strategy, restructuring, market analysis, due diligence, and economic development mandates. Specialties Mergers & acquisitions, capital raise, corporate strategy, entrepreneurship.
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