Canadian Tech M&A Mid-Year Check-In: Carve-Outs Rising as Momentum Builds for H2 2025
As we approach the halfway mark of 2025, Canada’s tech M&A landscape presents a tale of two halves. The early months of the year have fell short of consensus expectations, as a result of lingering macroeconomic instability, however, signs point to a strong resurgence in the back half of the year. Internal pipeline visibility, coupled with broader market conversations and encouraging macro signals, suggests that the temporary softness we’re experiencing is just that, temporary.
Much of the hesitation we’re seeing stems from instability within the public markets, ongoing uncertainty around tariffs, and a general sense of “wait and see” behavior across both strategic and financial buyers. Deals aren’t falling apart; they’re taking longer to close. This elongation in timelines is largely attributable to increased diligence scrutiny, not a lack of appetite. If anything, buyer interest remains high. The difference is that execution is more deliberate and measured than in years past.
One trend that continues to stand out amid the noise is the notable uptick in carve-out activity. As larger tech companies sharpen their focus and look to divest non-core assets, we’re seeing an increasing number of high-quality standalone business units come to market. For opportunistic buyers with the ability to navigate more complex transactions, this has created a window to acquire proven products and teams without paying premium platform multiples.
Notable recent examples include:
UnionWare, acquired by Valsoft from Togetherwork, underscores this trend clearly. UnionWare, a provider of union management software, had been rolled up into the Togetherwork portfolio several years ago but was quietly spun out in a transaction that reflects the increasing desire to right-size portfolios and focus on core verticals.
Alessa, a financial compliance and AML software provider, was also recently acquired by Valsoft, marking the firm’s entry into the financial compliance space. This deal, too, highlights how carve-outs are creating pathways for strategic expansion into adjacent verticals with minimal integration friction.
4Site, a facilities management software business, was carved out and acquired by Volaris Group, continuing the group’s consistent execution strategy of acquiring niche vertical software businesses. As a unit previously embedded in a larger organization, 4Site is emblematic of the type of assets coming to market; proven products with strong customer bases, but often under-resourced or lacking focused go-to-market execution.
Snowtrack, a version control tool for artists and designers, was recently acquired by Perforce from its previous corporate parent, marking another compelling carve-out. Snowtrack’s differentiated technology will now be integrated into Perforce’s portfolio to enhance creative collaboration capabilities; yet another example of how targeted carve-outs are enabling strategic buyers to accelerate innovation without the overhead of building from scratch. The transaction reflects a growing trend: even tools built for niche workflows are commanding interest when they fill a distinct strategic gap.
Taken together, these transactions point to a broader theme: carve-outs are not only on the rise, but they are becoming a central feature of the current market dynamic. For acquirers with the operational depth and integration muscle to handle these deals, 2025 is already shaping up to be a year of strategic advantage.
Looking ahead, we remain highly optimistic about deal velocity improving into the fall and early 2026. Several tailwinds support this outlook:
Stabilizing macroeconomic conditions: While uncertainty remains, central banks across North America are now signaling a more predictable rate path, and inflationary concerns are subsiding in key sectors. This clarity is beginning to reflect in buyer confidence.
Rebound in private equity deployment: After a slow 18 months, many Canadian and cross-border PE funds are returning to the table, driven by LP pressure to deploy capital and a clearer sense of pricing discipline in the market.
Backlogs building internally: We’re seeing more bids, deeper diligence activity, and active negotiations across both strategic and financial buyers in our own pipeline. These signals typically precede a spike in closings, and we expect that to be reflected in Q3 and Q4.
Renewed interest in vertical SaaS and infrastructure tooling: Buyers continue to show strong interest in defensible, mission-critical solutions, particularly those with sticky customer bases and recurring revenue models. Canadian founders operating in these niches should be well-positioned for strong exit outcomes over the coming quarters.
In summary, while the first half of 2025 has tested the patience of many market participants, it has also sharpened the focus on what makes a deal truly actionable. With carve-outs offering compelling opportunities and buyer appetite remaining robust, the back half of the year is setting up to deliver a strong rebound in tech M&A activity across Canada.
As always, we remain committed to helping founders, operators, and investors navigate this evolving environment. If you’re evaluating a potential transaction or exploring strategic options, now is the time to prepare, because momentum is building.
Thanks for reading, and as always, don’t hesitate to reach out to learn more about M&A within the tech industry!