INDUSTRY · TECHNOLOGY
Selling a technology business in Quebec
With 59% of Canadian private equity transactions taking place in Quebec in 2024, buyer appetite is real. But in technology, value sits in intangibles — code, recurring revenue, team — and due diligence is surgical. The difference between a premium and a discount often comes down to how well the file is prepared.
The technology market in Quebec
9,819
ICT businesses with employees
MEIE, 2024
$55.6B
ICT sector revenue
MEIE, 2024
59%
Of Canadian PE deals done in Quebec
Bennett Jones, 2024
Quebec’s ICT sector is massive: 9,819 businesses with employees, 180,933 workers, $55.6 billion in revenue, and $27 billion in real GDP — or 6.2% of Quebec’s GDP (Sources: Ministère de l'Économie, de l'Innovation et de l'Énergie (MEIE), Institut de la statistique du Québec, 2024).
Between 2019 and 2024, the sector’s average annual growth was 5.74%, compared to 1.52% for the economy as a whole.
But the sector is structurally dominated by services — consulting, development, managed services — rather than software publishing. Close to 70% of ICT professionals work in computer systems design and related services (NAICS 5415, TechnoCompétences, 2021).
For a seller, this reality is fundamental: it decides whether the business will be valued as a product (ARR multiple) or as a service (EBITDA multiple).
On the transaction side, Quebec leads Canada: the province captured 59% of volume and 69% of value of all private equity transactions in 2024, or $19.1 billion (Bennett Jones).
(Sources: Technum Québec; Montréal International.)
The buyer ecosystem — Valsoft, Novacap, Constellation Software, Caisse de dépôt, Fonds de solidarité FTQ — is well-capitalized and active. For the owner of a Quebec SME in the technology sector looking to sell, the buyer pool is deep, especially above $3 million in recurring or normalized revenue.
What’s different about selling in technology
The steps to sell a business in Quebec stay the same — preparation, valuation, competitive process, due diligence, closing. In technology, the difference shows up in the quality of the proof: value sits almost entirely in intangibles — code, data, contracts, team — and due diligence is surgical in its rigour. Advising on the sale of a Quebec technology SME is largely about making those intangibles legible to the buyer before they start digging.
The ARR vs. EBITDA split changes the rules
The market separates two worlds. Pure B2B SaaS platforms — where adding a thousandth user costs almost nothing — are valued on an annual recurring revenue (ARR) multiple.
IT services companies, custom development shops, and consulting firms — where every additional contract requires more hiring — stay valued on normalized EBITDA. In Quebec, where the sector is dominated by services (NAICS 5415), that distinction takes most SMEs out of the ARR logic (TechnoCompétences).
IP chain of title is a silent deal-breaker
Under Canadian law, the author is the default owner of the copyright, with an exception for work in the course of employment. For contractors, contract discipline is essential: without explicit assignment clauses, the buyer can’t be sure they’re actually buying the code.
Technical debt — thin documentation, hard-to-maintain architecture, untracked open-source dependencies — converts directly into a price discount or holdback clauses (BDC).
Team risk is structural
TechnoCompétences reports an average turnover rate of 15% in 2024 in the sector — almost one in six people replaced each year. Dependency on one or two key developers is the number-one value destroyer flagged by buyers.
Retention — bonuses, phantom shares, transaction bonuses — has to be planned 18 to 24 months before going to market.
Typical multiples
In technology, there’s no such thing as a "sector average multiple." Valuation gaps are first and foremost business-model gaps: a pure B2B SaaS with 80% margins and low churn commands a radically different multiple from a custom development agency with the same revenue. To get a full view of the Quebec market, our analysis of valuation multiples by industry places tech alongside the other dominant sectors.
Multiple ranges — Technology SMEs
Base: ARR for pure SaaS · Normalized EBITDA for services models
B2B SaaS (profitable SME)
ARR multiple. Common range for Quebec/Canadian SaaS SMEs. Growth and retention set the position. (Proxy: Kroll)
B2B SaaS — premium KPIs
ARR multiple. Low churn, net retention above 110%, gross margins above 75%, sustained growth above 25%. Strategic premium of ~27% vs. financial buyers (Kroll).
Managed IT services (MSP/MSSP)
EBITDA multiple. Segment in active consolidation (roll-ups). The cloud share vs. hardware support shifts the multiple. (Proxy: BMO mid-market)
Custom development / agency
EBITDA multiple. Highly sensitive to client concentration, founder dependency, and transferability. NAICS 5415 dominance in Quebec.
Cybersecurity (services or product)
EBITDA or ARR multiple depending on the model. Strong demand. Controls maturity (SOC 2, ISO 27001) directly shifts the multiple.
These ranges are indicative and combine North American proxies (Kroll, ClearlyAcquired, Software Equity Group) adjusted for the Quebec SME market. Private SME transactions are rarely disclosed: a 30 to 50% size and liquidity discount applies compared to public comparables. Sources: Kroll Technology M&A Report 2025, ClearlyAcquired, BDC.
What pushes the multiple up
- Strong contractual recurrence (SaaS, maintenance) and low churn
- Scalable product with gross margins above 75%
- API-first architecture, integrations in the client ecosystem
- Documented Law 25 compliance, SOC 2 or ISO 27001
- Low client concentration (less than 15% per client)
Turning those drivers into a defensible price requires a rigorous business valuation that cross-checks the ARR or EBITDA multiple against discounted cash flow (DCF) and recent Quebec SME transaction comparables.
What pushes the multiple down
- Founder dependency for sales and delivery
- Undocumented code, heavy technical debt
- "Recurring" revenue that’s actually linear (hour blocks, chopped-up projects)
- Incomplete IP chain of title (contractors, open source)
- Law 25 non-compliance (penalties up to $10 million or 2% of global revenue)
Who buys technology businesses in Quebec?
Globally, strategic buyers dominate software M&A — 71% of announced deals in 2025 (Kroll). In Quebec, the weight of PE funds and consolidators is unusually high: the province captured 59% of Canadian PE transactions in 2024, and 69% of the total value deployed (Bennett Jones). The ecosystem — Valsoft, Novacap, Constellation, Caisse de dépôt, FTQ — is among the most active in North America.
Who buys and why
Competitors, integrators, software vendors, or traditional businesses (finance, logistics) looking to acquire technology capabilities — AI, automation, compliance — rather than build them in-house.
Valsoft, Novacap, Constellation Software, FTQ funds — buy-and-build strategy: they acquire an SME as a platform, then consolidate through successive acquisitions. Particularly active in Quebec thanks to para-public capital.
A management team that buys the business. Rarer in technology because of financing complexity and dependence on intangible assets — usually requires vendor financing or institutional co-investment.
Indicative estimates — no public source breaks down buyers by profile for technology SMEs in Quebec. Hierarchy reconstructed from global software M&A data (Kroll, 2025: 71% of announced deals = strategic) and the Quebec PE ecosystem (Bennett Jones: 59% of Canadian PE transactions in 2024). The percentages shouldn’t be read as market data.
The acquisition of Quorum Information Technologies by Valsoft Corporation (Montreal, December 2025) illustrates the dominant logic. Valsoft acquired this SaaS vendor specialized in automotive dealerships for roughly $60 million, entirely in cash — not to fold Quorum into its operations, but to integrate it as a standalone entity within its TAG Software group.
That type of deal is paradigmatic in Quebec: the consolidator isn’t trying to absorb the technology but to harness dominance of a vertical niche market — which rewards SMEs positioned on a specific vertical, with demonstrated recurring revenue and an autonomous team that can run without the founder.
Approaching several of those consolidators at once without prematurely disclosing the name of the business is exactly the discipline of a business broker specialized in selling businesses in Quebec: anonymous outreach, screening of qualified buyers, NDA, then structured competition.
Frequently asked questions — Selling a technology business
Why is my IT services business valued on EBITDA and not on ARR?
ARR multiples are reserved for pure SaaS platforms where adding a thousandth user costs almost nothing. If growing your revenue by 20% means hiring 20% more developers or technicians, the market treats you as a services company, not a platform. In Quebec, close to 70% of ICT professionals work in services (NAICS 5415, TechnoCompétences) — the majority of "tech" SMEs are valued on normalized EBITDA.
Does Law 25 really change the valuation of my technology business?
Yes, directly. Law 25 imposes a governance regime for personal information, a confidentiality incident register, and can trigger administrative penalties of up to $10 million or 2% of global revenue. In due diligence, non-compliance turns into large escrow holdbacks, a price discount, or a deal walk-away. On the other side, a "Law 25 native" architecture — granular consent, documented anonymization, portability — is a competitive advantage you can put a price on.
Why does source code ownership always come up in due diligence?
Because the main asset is intangible. Under Canadian law, the author is the default owner of the copyright, with an exception for work produced in the course of employment. For contractors, without explicit assignment clauses, the buyer can’t be sure they’re actually buying the right to use the code. Auditors also check open-source dependencies — some "copyleft" licences (GPL) can, in theory, force disclosure of proprietary code.
How does a buyer tell a real SaaS platform from a services company in disguise?
Three practical tests. Product test: is revenue growth decoupled from headcount growth? Gross margins above 75% and a near-zero marginal cost per user are the markers of a pure SaaS. Commercial test: are renewals managed by process (Customer Success) or by the founder personally? Team test: is there a second layer of technical leadership capable of maintaining and evolving the product without the founder?
Is it realistic to demand 100% cash at closing?
It’s rare, and often strategically unwise. The heavy weight of intangible assets (code, subscriptions, talent) pushes buyers to structure risk. Mid-market norm: 60 to 70% cash at closing, then an earn-out of 12 to 36 months tied to KPIs (ARR, churn, client retention). Refusing any conditional mechanism forces the buyer to cut their initial offer drastically.
Do I have to stay in the business after the sale?
Almost always, yes — but how long depends on the type of buyer. A strategic buyer is looking for integration synergies and may render the founder redundant more quickly (6 to 12 months). A private equity fund often acquires the SME as a platform for future acquisitions and will expect the founder to stay on, keep a minority stake, and drive expansion for 24 to 36 months.