How to build value in your business – even in a year like 2020!

Our Interview with Aly Gillani, Managing Director, Global Investment Banking, RBC Capital Markets

Aly is a Managing Director in RBC’s Technology Investment Banking group and long-time supporter of SAAS NORTH. With over 10 years of capital markets experience, Aly’s primarily focus is on M&A, equity and debt financing for technology and media companies. He has led a number of transactions ranging from $50mm to $5bn in size across various sub verticals including Software / SaaS, IoT, digital media, Internet and FinTech.

We recently spoke with Aly about how companies can expect valuations to adjust in a recessionary environment. He also shares his thoughts on what SaaS companies can do now to increase their value for the future.

It’s been quite the ride in 2020. How are companies responding to the global pandemic and recession?

Overall, some companies are really benefitting from the current environment and are responding with innovative ideas. A great example of a company adapting and thriving is Shopify, which posted incredible Q2 results with a profit of US$36 million. In Canada, we are seeing tech companies being very resilient and there are many structural winners, such as those in the education technology field.

Companies are falling into one of the following three groups:

  • The beneficiaries that are adapting and thriving;
  • The prudent organizations with strong balance sheets and the capabilities to weather the storm; and
  • Those who are facing headwinds and require capital or need to pivot

What do you see happening with valuations?

Early on in the COVID-19 health crises, a valuation gap was created between issuers and investors but that gap is narrowing both in private and public markets. Timing is very important if you are looking to exit your business or raise capital. Investors are looking at structural winners beyond 2020. As we’ve seen in the past, we will get through this crisis, and in many cases companies will be stronger and more resilient.

How has virtual work impacted investments and acquisitions?

Timeline for IPOs and public equity offerings are actually accelerated now as investors are comfortable with the virtual road shows and companies avoid the days and weeks of travelling from city to city for presentations. However, with  mergers and acquisitions and private capital markets, buyers and investors want to meet face to face with the management team. As travel starts to open up again, you will see mergers and acquisitions pick up.

What is your advice for companies looking to sell?

The key is to make sure you are prudent and that you have the capital to weather the storm. What we are seeing is that companies are raising capital to create a strong balance sheet, but they may have to take less favourable terms.

What are your thoughts on the future outlook for tech companies?

I think we will come out of this stronger than before. We’ve seen some really inspiring examples of tech innovation or companies pivoting to adapt to the current reality. There is an opportunity for good, and companies are moving faster than ever before with tremendous innovation. It’s exciting to see.

Aly will moderate a SAAS NORTH NOW panel discussion called “Navigating the Capital Markets”. RBC is a Founding Patron sponsor of SAAS NORTH.