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A rare Canadian technology initial public offering has foundered, with Toronto’s Dye & Durham Corp. deciding to postpone its attempt to go public.

The company, which predominately offers cloud-based software to corporate law firms, announced plans for a $125-million IPO in late September. Late last week, Dye & Durham quietly told its bankers to postpone the deal, while adding that a sale may be in the company’s cards instead.

Dye & Durham faced a tough market as it tried to woo investors. Canadian equity markets whipsawed in October, and over the six weeks since filing an IPO prospectus, the S&P/TSX Composite Index has dropped 5.8 per cent.

The company originally set out to sell shares between $8 and $9 each, which would have given the company a market value between $252-million and $277-million. But its late-October deadline to finalize the price came and went. Shortly after, Dye & Durham considered lowering its price per share to $7, according to someone familiar with the offering, but ultimately decided to postpone the deal.

“In light of the poor market conditions we decided to pause the IPO for the time being and did not agree to go public at a lower price,” the company wrote in an e-mailed statement.

Some investors also took issue with the IPO’s use of proceeds, according to people familiar with the deal – $75-million of the money raised was set to go to selling shareholders, with more than $55-million of that going directly to companies controlled by chief executive Matthew Proud and his brother, company director Tyler Proud.

At the same time, recent swoons by big names in the U.S. technology market also hurt investor sentiment, as did Dye & Durham’s acquisitive history, which raised a few questions about organic growth potential, the sources said.

Given the state of the market, Dye & Durham has suggested it may seek an acquisition instead. “Because Dye & Durham is a high-margin business that achieved 30 per cent organic growth last year, we are currently considering our strategic alternatives,” the company said in its statement.

The offering by D&D would have been one of the few tech IPOs in Canada in recent years. Shares of Alithya Group Inc., a Montreal-based technology consulting services firm modelled after CGI Group, started trading earlier this month; before that, the last IPO of note was in the spring of 2017 by online mortgage services firm Real Matters Inc., which has been a bust for investors with the shares dropping 71 per cent since the deal.

The IPO success stories from Canada’s small but growing tech scene have largely been U.S. offerings. Ceridian HCM Holding Inc., a Minneapolis-based company managed out of Toronto by Canadian entrepreneur David Ossip, went public both in New York and Toronto last spring and its shares have climbed 64 per cent since the offering. Shopify Inc.'s wildly successful 2015 IPO was also dual-listed.

This week, The Globe and Mail reported that Montreal retail management software firm Lightspeed POS Inc. is eyeing an IPO in the new year, while long-standing IPO candidate PointClickCare Technologies Inc., a health software firm from Mississauga, delayed IPO plans after raising private equity capital instead last year.

Dye & Durham’s roots are in providing supplies for legal offices, but the company has been transformed in recent years. CEO Mr. Proud and his brother previously ran OneMove Technologies Inc., which specialized in web-based software for real estate transactions, and they acquired Dye & Durham in 2016. Shortly after, the company purchased a British software company, as well as OnCorp Direct Inc., which searches public registries.

The company reported earnings before interest, taxes, depreciation and amortization of $14.1-million on revenue of $32.5-million in fiscal 2018, which ended in June. Net profit for the period was $1.2-million.

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