The latest sale of an Ottawa tech firm to American interests may presage several more such transactions over the next few months, according to industry observers.
Entrust, a software security firm, employs 300 people in Ottawa and was spun out of Nortel 13 years ago.
Thoma Bravo, an American private equity firm with $2.5 billion in capital, plans to take over the company for $114 million and promises to spend money on Canadian operations.
Entrust President and CEO Bill Conner is based in Dallas, Texas and sought a buyer for 18 months, believing Entrust could not survive in a market dominated by massive firms such as IBM and Symantec.
Entrust employees were not allowed to speak to CTV Ottawa on the record. But some acknowledged off-camera that the takeover could be a positive step after years of losses and layoffs.
Several other Ottawa firms will likely be forced to sell in coming months, said Brian O'Higgins, one of Entrust's co-founders who has started another security firm.
Buyers will get a big bargain, privatize their purchase, and regroup, he added.
Entrust's struggles made the firm a prime target for takeover, said Wayne Gudbranson, CEO of the Branham Group and a local tech analyst. The new question is how committed the new owners are to research and development.
"The administrative costs of being a public firm have become quite onerous and can easily take up at least 25 per cent of management's time and the company's profits just to maintain that presence," Gudbranson told CTV Ottawa.
"If they had gone private, they might have been able to stay alive a little longer."
The Entrust deal is expected to close over the next few months.
With a report from CTV Ottawa's Paul Brent
