GENERAL INDUSTRY REPORT - Q2 2021 - Whitehorn Capital Inc.
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GENERAL
INDUSTRY REPORT
Q2 2021
Q2 2021 Key Highlights &
Featured Articles
Q2 2021 Key Highlights
• The Organization for Economic Co-operation and Development (OECD) revises its forecasted growth for the Canadian economy from 4.7% to 6.1%,
citing reduced COVID-19 restrictions in H2 2021 and higher commodity pricing.
• Statistics Canada reported the nation added 303,000 jobs in March, led by 95,000 retail jobs; March unemployment rate came in at 7.5%, down
from 8.2% and 1.5% below pre-pandemic levels.
• Kansas City Southern agrees to a merger with Canadian National Railway on May 21, abandoning an agreement to be acquired by Canadian Pacific
Railway.
• Canada and the European Union launched a new partnership to secure supply chains for critical minerals and metals; focused on enhancing security
and sustainability of trade and investment, and ESG collaboration.
• Pet Valu Holdings successfully raised $275MM at $20 per share in its IPO and began trading on the TSX on June 24 under the ticker symbol PET.
Featured Articles
Check out some of the articles that we have written this quarter below.
Cryptocurrency Update
In this article, we provide insight on the top cryptocurrencies today and highlight
noteworthy developments throughout the first half of 2021. From the top
cryptocurrencies today, current crypto trends, recent pullback factors and more!
Read the full article here
The Canadian Plant-Based Industry
This article looks at how the plant-based industry is growing in Canada for both
consumers and producers and other Canadian protein companies’ investments.
It looks at how Canada is leading exporter or plant-based protein and how
consumers in Canada are starting to choose plant-based proteins instead of
meat.
Read the full article here
2 Q2 2021 General Industry Report
Everything You Need to
Know About ESG
Everything You Need to Know About ESG
What is ESG?
Environmental: How a company acts towards the environment, it helps measure how sustainably a company is operating. Environmental can also be used
to evaluate environmental risks a company may face and how the company would handle those risks.
Social: How a company acts with respect to its business relationships, including towards its employees, customers and communities.
Governance: How a company manages itself. This involves the morals and ethics of a company.
There is relatively low regulation for governance on private companies compared to public companies, but having good governance is still key for long-
term success. A system of reporting within an organization can be a first step. The owner / manager may play most governance roles within the company
but how the owner acts on both financial and other reporting is critical. How does the owner seek guidance? Perhaps a formal board would help the owner
set out the business strategy and manage macro level concerns and opportunities.
“At its core, ESG investing is about influencing positive changes in society by being a better investor”
- Hank Smith, Head of Investment Strategy at The Haverford Trust Company
How Do I Make $$ Investing in ESG?
One might think that if a company is spending resources monitoring ESG impacts and making decisions to improve its ESG impacts, it means it is less
profitable or operating at a competitive disadvantage. From an investment return perspective, this has not been the case, at least based on the history
available. Since 2018, when ESG funds became mainstream, many ESG focused ETFs have shown returns similar to their non-ESG focused indexes.
$35 iShares ESG Aware MSCI Canada Index ETF (XESG) vs. iShares S&P/TSX 60 Index ETF
$30 iShares
$25 S&P/TSX
$20 XESG
$15
$10
May-19 Aug-19 Nov-19 Feb-20 May-20 Aug-20 Nov-20 Feb-21 May-21
Many investment managers believe, using an ESG screening criteria for their investments generally helps identify management teams with vision and
management styles more instep today and going forward. If you are operating a business without ESG in mind, the theory holds you are going backwards
and are less likely to adapt in the future.
How Does ESG Impact My Private Business?
The ESG momentum is already impacting M&A in the private sector. Many large companies have adapted their respective acquisition criteria to at least
maintain or improve their company’s ESG ratings. As well, most private equity firms are being proactive at addressing ESG criteria in their review of
potential acquisition candidates. The bar is likely still relatively low for a private company but ensuring the business is at least “not a negative” from an ESG
front is critical to attract as many buyers as possible. This could mean preparing the following:
Environmental – ensuring all environmental guidelines as set out by governments or industry standards are exceeded. Do you monitor the soil at your
business’s locations? Have there been any issues historically that could be managed better?
Social – How does your business interact with its local community or communities? Do you know your neighbours? Are there causes, charities, issues that
are important to the community that are also important to the employees of your business?
Governance – Do you have a board? How are macro issues / opportunities reviewed and acted upon? There are no “one-size-fits-all” solution for
private company governance.
Read the full article here
3 Q2 2021 General Industry ReportNorth American
Mergers & Acquisitions
Whitehorn has been actively tracking M&A activities in various sectors. The majority of transactions tracked involved acquiring companies
seeking to diversify product and service offerings, as well as looking to expand geographically.
Acquirer Target
Sector Date Acquirer Target
Location Location
Logistics April 2021 InstarAGF Asset Management Inc. Toronto, ON PRT Growing Services Ltd. Victoria, BC
Acquisition of reforestation logistics provider operating across North America from TriWest Capital Partners.
Financial Services April 2021 Hub International Ltd. Chicago, IL Wessex Financial Calgary, AB
Acquisition of employee benefits, life and living benefits firm serving the family and business markets throughout
Alberta by global insurance broker.
Logistics April 2021 Mullen Group Ltd. (TSX:MTL) Okotoks, AB Bandtra Group of Companies Smithers, BC
Acquisition of group including Bandstra Transportation Systems and Babine Truck & Equipment that adds 180
power units, 360 trailers and $65MM in annualized revenue.
Water Treatment April 2021 Kurita Water Industries Ltd. Japan Keytech Water Management Kitchener, ON
Acquisition of water treatment chemicals and equipment systems manufacturer as part of Eastern Canada
expansion.
Equipment Rentals May 2021 Maynbridge Capital N/A Zedcor Inc.'s (TSXV:ZDC) Rentals Calgary, AB
segment
$11.3MM cash acquisition of the assets of Zedcor's Rentals segment with additional bonus payments over three
years.
Entertainment June 2021 Bragg Gaming Group (TSX:BRAG) Toronto, ON Wild Streak Gaming Las Vegas, NV
US$30MM acquisition of content creation studio with a portfolio of 39 premium casino slot titles supported
across online and land based applications.
Industrial Services June 2021 Surepoint Technologies Group Nisku, AB Ironline Compression Services Calgary, AB
Acquisition of the mechanical services and parts distribution arm of Ironline Compression LP to strengthen Western
Canadian presence.
Industrial Automation June 2021 ATS Automation Tooling Systems Cambridge, Control and Information Ireland
Inc. (TSX:ATA) ON Management Ltd.
Acquisition of industrial automation system integrator to expand customer base in the biopharma and
pharmaceutical markets.
Building Materials June 2021 Doman Building Materials Group Vancouver, BC Hixson Lumber Sales Dallas, TX
Ltd. (TSX:DBM)
US$375MM cash acquisition of lumber and treated lumber wholesaler and manufacturer operating in the central
US to expand product suite and to further accelerate US growth.
Manufacturing June 2021 North American Construction Acheson, AB DGI Trading Pty Ltd. Australia
Group Ltd. (TSX:NOA)
$23.5MM acquisition of production critical components supplier to the mining industry as part of its strategy to
vertically integrate its capital maintenance program and to further diversify service offerings.
Communications June 2021 Group led by founder and N/A Exfo Inc. (TSX:EXF) Montreal, QC
(Pending) majority shareholder, Germain
Lamonde
Going private transaction for test, monitoring and analytics equipment provider for the communications industry.
4 Q2 2021 General Industry ReportWhitehorn Merchant Capital is an independent, Western Canadian financial advisory firm
that provides business owners and management teams with crisis advisory services, capital
raising, acquisition, and sale of business transaction solutions.
Our Services
Whatever milestone transaction you are considering, Whitehorn’s leaders can guide you through the
process. We have the network in your industry and the experience to implement a tailored, effective
strategy for you and your business.
Financing Sale of Business Acquisitions Management Buyout
The Whitehorn Advantage
Transaction Management Industry Focused Network
Whitehorn’s senior professionals will lead your transaction Whitehorn knows the buyers and investors in your industry.
from initiation to closing. We will support you and your We know which strategic and financial parties are active in
transaction so you can ensure your business performs the market today, the transactions they’ve done, what they
through closing, which is critical to obtaining an industry want, and what they’re willing to do.
leading valuation.
Marketing and Presentation Maximizing Value
Whitehorn creates comprehensive, industry leading Maximizing your value maximizes our value. By presenting
marketing materials which help buyers and investors your business in the best way possible, to the most motivated
understand your business, your competitive advantages, buyers and investors, we will add significant value to your
growth potential, and unique value proposition. transaction.
Contact Whitehorn today for expert advice on accessing capital, Whitehorn Merchant Capital Inc.
Suite 270, 333 - 24 Avenue SW
planning for business growth, and addressing business succession. Calgary, Alberta T2S 3E6
We look forward to helping you reach the achievement of your goals. 403-718-9860 | www.whitehorncapital.comYou can also read
