INDUSTRY · TECHNOLOGY INDUSTRY
Selling a technology business in Quebec
A tech buyer pays less for code alone than for what makes it transferable: recurring revenue, intellectual property, compliance and a team that can keep going without you.
The technology sector in Quebec
Quebec’s technology ecosystem covers very different worlds — each with its own sale logic. At the heart of the SME market, two revenue models split the field, and they don’t get valued the same way.
- B2B SaaS and software vendors — A “one-to-many” model: the thousandth user costs almost nothing to serve. Valued on annual recurring revenue (ARR). About 275 businesses and 12,100 workers in Quebec.
- Managed IT services (MSP and MSSP) — A hybrid model between contractual recurrence and project work. Valued on EBITDA. Segment in active consolidation by private equity funds.
- Custom development and digital agencies — Service business with high human intensity: every contract requires more hires. Valued on EBITDA. The most common segment among Quebec tech SMEs.
- Cybersecurity — Spans both product SaaS and managed services. High demand from strategic buyers. Documented controls (SOC 2, ISO 27001) become decisive.
- Data, analytics, and artificial intelligence — Logic varies depending on whether AI sits inside software sold to many clients (SaaS valuation) or is delivered as custom work project by project (services valuation).
- Video games and fundamental AI research — Separate markets with their own dynamics (venture capital, premium on rare talent, integration into global ecosystems). Not covered here.
From here, we’re talking about Quebec SMEs in the $1 to $30 million revenue range presenting to the market as B2B SaaS, MSP, or development agencies. At that size, the revenue model — contractually recurring on one side, project- or hour-based on the other — is what sets the valuation base a buyer will pay.
The sector in numbers
9,819
ICT businesses with employees
MEIE, 2024
~70%
Of ICT professionals in IT services
TechnoCompétences, 2021 census
$19.1B
Capital deployed by private equity funds in Quebec
Bennett Jones / CVCA, 2024
Quebec’s information and communications technology (ICT) sector is sizeable: 9,819 businesses with employees, close to 180,000 workers, $55.6 billion in revenue, and roughly 6.2% of Quebec’s GDP. Between 2019 and 2024, the sector grew at an average of 5.7% per year, against 1.5% for the economy as a whole.
But the typical SME isn’t a software vendor. It’s a services firm. Close to 70% of ICT professionals work in computer systems design and related services. That reality pulls most SME deals out of the revenue-multiple logic and back into an EBITDA logic.
On the deal side, Quebec leads Canada. The province captured 59% of volume and 69% of value in Canadian private equity deals in 2024 — $19.1 billion deployed. The Quebec buyer ecosystem — Valsoft, Novacap, Constellation Software, Caisse de dépôt, Fonds de solidarité FTQ, Fondaction — is one of the most active in North America, and it sits on top of a network of para-public institutions (Investissement Québec, BDC) that co-invest actively alongside private buyers.
For a Quebec SME above $3 million in recurring or normalized revenue, the buyer pool is deep. Below that line, in the micro-agency segment under $1 million of EBITDA, deals get erratic — often talent acquisitions or survival mergers, more than real capital allocation.
Sources: Quebec Ministry of Economy, Innovation and Energy, general portrait of the ICT industry; TechnoCompétences, sector diagnostic 2025-2028; Bennett Jones, Quebec’s Evolving M&A Market — The Rise of Private Equity and Domestic Buyers (March 2025); Canadian Venture Capital and Private Equity Association, market report Q4 2024.
What’s different about selling in technology
The steps to sell a business in Quebec apply across sectors. But in technology, value sits almost entirely in intangibles — code, data, contracts, team, tax credits — and due diligence is surgical. Five sector-specific issues weigh particularly hard on what a buyer will pay.
The ARR vs. EBITDA split sets the valuation base
Before discussing a multiple, the buyer first decides which base it applies to.
A pure B2B SaaS platform — where adding users costs almost nothing, gross margins exceed 75%, and renewals are run by process — is valued on annual recurring revenue (ARR). The strongest profiles can reach 6, 7, even 8 times ARR.
A services company — custom development, managed IT, consulting — where each additional contract requires more hiring, is valued on normalized EBITDA. Multiples sit between 3 and 9 times depending on contract quality and management autonomy.
In Quebec, where the sector is dominated by services, that distinction takes most SMEs out of the ARR logic. Founders may present “recurring maintenance contracts” or “reserved hour blocks” as ARR; buyers usually read them as linear revenue.
The IP chain of title
In technology, the main asset is intangible. Due diligence first confirms that you actually own the right to use your code.
Under Canadian law, the author of code is the default copyright owner, except for work produced in salaried employment. For contractors — freelancers, agencies, offshore developers — the chain of title is incomplete without a signed assignment clause.
Most gaps can be resolved through retroactive assignments or warranties in the sale agreement. But they stretch due diligence, justify price holdbacks, and slow negotiation if key contractors are hard to reach.
Open-source dependencies are the other point buyers dig into. Some copyleft licences impose constraints that can clash with a proprietary model. The risk is often resolved by replacing a dependency or documenting its use, but the inventory needs to be ready.
Technical debt — thin documentation, hard-to-maintain architecture, outdated languages, abandoned libraries — converts directly into a price discount or a holdback clause.
The technical team: the hardest asset to transfer
In technology, the code is nothing without a team able to maintain and evolve it.
TechnoCompétences reports an average turnover rate of 15% in 2024. Dependency on one or two key developers is one of the first risks buyers flag. If the architecture lives in the founder’s head or in one principal developer, the buyer prices that continuity risk.
Retention gets planned 18 to 24 months before going to market: transaction-linked bonuses, phantom shares, non-compete and non-solicit agreements, and a trained second layer of leadership. A stable team with a documented retention plan can be worth more than an extra point of growth.
Law 25 compliance — a price topic, not just a legal one
Quebec’s Law 25 turned data compliance into a valuation lever. It mandates personal-information governance, an incident registry, anonymization policies and data portability, with administrative penalties of up to $10 million or 2% of global revenue.
For a tech SME that collects, hosts, or analyzes data, missing consents, no incident registry or unclear data-destruction policies become first-order deal risks. Buyers respond with escrow holdbacks, a price discount or a walk-away.
An architecture designed to meet Law 25 — granular consent, documented anonymization, portability — reduces the unknown risk buyers otherwise finance with a discount.
A note for SMEs claiming R&D tax credits (SR&ED, eBusiness tax credit): transferability depends on deal structure and file quality. The eBusiness tax credit is tied to the certified employer and doesn’t transfer mechanically, so the topic needs tax review before going to market.
Sources: Légis Québec, Act respecting the protection of personal information in the private sector (Law 25); Business Development Bank of Canada, how to buy a tech business; Copyright Act, section 13 (ownership of copyright); Linux Foundation, OpenChain — assessment of open-source practices in M&A due diligence.
Typical multiples
In technology, there’s no “sector-average multiple.” Valuation gaps are first business-model gaps: a pure B2B SaaS with 80% gross margins and low churn commands a radically different multiple from a custom development agency at the same revenue.
For the broader picture, our analysis of valuation multiples by industry places tech alongside the other dominant sectors in Quebec. And before applying a range, EBITDA needs to be normalized — owner compensation adjusted, non-recurring expenses removed, capitalized vs. expensed R&D clarified.
Multiple ranges — Technology SMEs
Base: ARR for pure SaaS · Normalized EBITDA for services models · Size and liquidity discount of 30 to 50% vs. public comparables
B2B SaaS — profitable SME, baseline KPIs
ARR multiple. Common range for Quebec and Canadian SaaS SMEs. Growth and net retention drive the position.
B2B SaaS — premium KPIs
ARR multiple. Low churn, net retention above 110%, gross margins above 75%, sustained growth above 25%. Strategic premium of about 27% over financial buyers.
Managed IT services (MSP / MSSP)
EBITDA multiple. Segment in active consolidation in Quebec and Canada. The share of managed cloud (vs. plain hardware support) and average contract length push toward the high end.
Custom development / digital agency
EBITDA multiple. Highly sensitive to client concentration, founder dependency, and the rigour of delivery processes. The most common segment among Quebec tech SMEs.
Cybersecurity (managed services or product)
EBITDA multiple for MSSPs, ARR for pure-play vendors. Strong strategic-buyer demand. Controls maturity (SOC 2, ISO 27001) directly shifts the position.
Indicative market benchmarks, not a price promise. Final value is established deal by deal: normalized valuation basis, transferability, sector-specific risks, deal structure and real buyer competition.
What pushes the multiple up
- Real contractual recurrence and low churn — multi-year signed contracts, renewals managed by a structured process (not by the founder personally), net revenue retention above 110%. That’s what shifts the valuation base from EBITDA to ARR.
- A product that grows without proportional hiring — gross margins above 75%, near-zero marginal cost per user, documented and supportable cloud infrastructure. That’s the operational definition of a transferable platform.
- API-first architecture and integrations into the client ecosystem — native connections to the ERPs, CRMs, or sector tools your clients already run. The customer’s switching cost becomes a barrier to entry that the buyer pays for.
- Documented Law 25 compliance and formal cybersecurity controls (SOC 2, ISO 27001, NIST CSF) — the buyer doesn’t have to provision a remediation cost. The time saved in due diligence shows up in the multiple.
- Low client concentration — no client over 15% of revenue. Losing a single logo doesn’t derail post-deal projections.
What pushes the multiple down
- Critical founder dependency for sales, delivery, or technical maintenance — the buyer pays a multiple of seller’s discretionary earnings (SDE) rather than EBITDA, and imposes a long transition with a conditional price supplement.
- “Recurring” revenue that’s actually linear — hour blocks, projects sliced into monthly billing, contracts without auto-renewal clauses. The buyer reclassifies them as top-line revenue and applies the EBITDA multiple of a services firm.
- Incomplete IP chain of title — missing assignment clauses for contractors or employees who contributed to the product core, poorly inventoried open-source dependencies. Litigation or forced-disclosure risk that the buyer pushes back to the seller through post-closing warranties.
- Law 25 non-compliance — incomplete incident registry, poorly documented consents, missing anonymization. Administrative penalties of up to $10 million or 2% of global revenue. The buyer requires significant escrow holdbacks or walks away.
- Heavy technical debt — undocumented code, outdated languages or libraries, refactor needed within 24 months. The remediation cost is priced and deducted from the offer.
Sources: Kroll, Global Software Sector Update — Winter 2026; ClearlyAcquired, EBITDA multiples for SaaS and software companies (2025-2026); SaaS Capital, 2025 private SaaS company valuations; MNP Corporate Finance, Canada’s Middle Market M&A Update — Q4 2025; Aventis Advisors, MSP valuation multiples.
Who buys technology businesses in Quebec?
In Quebec, strategic buyers remain the majority, as in most software M&A markets. But private equity funds and consolidators are more active here than elsewhere in North America — the province sits on an unusually deep ecosystem that includes Valsoft, Novacap, Constellation Software, Caisse de dépôt, Fonds de solidarité FTQ, and Fondaction.
Who buys and why
Competitors, integrators, or large traditional businesses (finance, logistics, manufacturing) looking to acquire technology capabilities rather than build them in-house.
Platform strategy: acquire an SME as a beachhead, then consolidate through follow-on acquisitions.
A management team buying the business. Rarer in technology: almost always requires a vendor take-back.
Indicative view of the buyer pool, not market data. Percentages show the relative weight of profiles to approach; the outcome of a transaction depends on file quality, process confidentiality and the competition created.
Case in point: Valsoft Corporation acquires Quorum Information Technologies. In December 2025, Montreal-based consolidator Valsoft closed the acquisition of Quorum, a Canadian SaaS vendor focused on operations software for automotive dealerships. Enterprise value of about $60 million, entirely in cash.
What Valsoft actually bought wasn’t breakthrough technology. It was a dominant position in a complex vertical — North American auto dealerships — documented recurring revenue, and an autonomous team able to keep operating without founder dependency.
For an owner thinking about selling, the lesson is concrete: value comes less from code sophistication than from the depth of your vertical niche, recurring revenue and a team that can operate without you. IP chain of title, Law 25 compliance, incident registry and technical leadership need to be ready before outreach.
The next step is approaching several consolidators without revealing the company's name too early, risking team retention or disrupting renewals. That's exactly the role of a business broker in Quebec: anonymous outreach, qualified-buyer screening, NDAs and structured competition.
Sources: Valsoft Corporation, closing of the acquisition of Quorum Information Technologies (December 2025); Bennett Jones, Quebec’s Evolving M&A Market; Kroll, Global Software Sector Update — Winter 2026.
Frequently asked questions — Selling a technology business
Why is my IT services business valued on EBITDA and not on recurring revenue?
Because ARR multiples are reserved for software platforms where adding one more user costs almost nothing.
If growing revenue by 20% means hiring 20% more developers or technicians, the buyer treats the company as a services firm and values the margin generated by that workforce. For most Quebec tech SMEs, the multiple applies to normalized EBITDA, not revenue.
Do my SR&ED and eBusiness tax credits transfer automatically to the buyer?
No. SR&ED credits already received stay with the company, but pending claims, audits or CRA disputes become latent tax exposure that buyers price into the offer.
The Quebec eBusiness tax credit is more delicate: certification is tied to the certified employer, not to the business as an asset. A change of control can disrupt continuity unless the file is prepared with a tax specialist before going to market.
How does a buyer tell a real SaaS platform from a services company in disguise?
Three tests: revenue growth decoupled from headcount, renewals managed by process rather than by the founder, and a second layer of technical leadership.
If two of those answers are no, the market won’t pay a revenue multiple, no matter how the marketing reads.
Does Quebec’s Law 25 really change the valuation of my technology business?
Yes. Law 25 imposes personal-information governance, an incident registry and potential administrative penalties of up to $10 million or 2% of global revenue.
In due diligence, non-compliance becomes escrow holdbacks, a price discount or a walk-away risk. A well-documented privacy architecture reduces that uncertainty and can accelerate closing.
Why does source code ownership always come up in due diligence?
Because the main asset is intangible. Under Canadian law, contractors, freelancers and agencies need explicit assignment clauses for the buyer to be sure the company owns the right to use the code.
Auditors also check open-source dependencies. Some copyleft licences can create disclosure constraints, and one missing assignment from a key developer can be enough to delay the deal.
Is it realistic to demand 100% cash at closing?
It’s rare. Intangible assets — code, subscriptions, team — push buyers to structure risk. A common Quebec mid-market pattern is 60 to 70% cash at closing, then an earn-out over 12 to 36 months tied to retention, ARR or churn.
Refusing any conditional mechanism often leads the buyer to cut the initial cash offer.