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Legal software provider Dye & Durham Corp. plans to file next month to raise $150-million in an initial public offering on the Toronto Stock Exchange.

The acquisitive Toronto company pulled its original plans to go public in fall 2018 due to choppy market conditions. In addition, investors were cool to the fact more than half of the $125-million in proceeds would have gone to existing shareholders, mainly chief executive Matthew Proud and his brother Tyler, the chairman.

The company made two subsequent moves to address investor concerns as it prepared to test the markets again, The Globe and Mail reported in October. Tyler Proud gave up the chairman role to lead director Brian Derksen, former deputy chief executive of Deloitte LLP. In addition, D&D raised $185-million in debt from U.S. investment giant TPG and Australia’s Macquarie Group, using $50-million of the proceeds to pay a dividend to shareholders. D&D also made three acquisitions last March for $60-million,

D&D is on track to generate $80-million in revenue in its fiscal year ending June 30, with operating earnings of roughly $40 million, say sources familiar with the company. The Globe and Mail is not identifying the sources because they were not authorized to speak publicly about the company’s plans. D&D’s leadership believes it can generate revenue and operating earnings growth of 20 per cent to 25 per cent annually through a combination of acquisitions and expansion of its existing business.

The sources said the leadership has gained confidence it can pull off a successful IPO after getting a positive reception from potential investors in recent months. There was strong investor demand for IPOs last year by Canadian technology companies Lightspeed POS Inc. and Docebo Inc. on the TSX. Technology stocks over all have performed well so far in 2020, and a $250-million bought deal for Lightspeed stock this week was nearly two times oversubscribed. In another sign of confidence, Canadian waste-management firm GFL Environmental Inc. has been preparing to relaunch its IPO after its first attempt failed last fall, The Globe reported last week.

CEO Matthew Proud declined to comment on D&D’s plans. But the sources said the company plans to file a prospectus with regulators by mid-March and go public in April, targeting a valuation of $400-million to $500-million. D&D plans to use the proceeds to pay down much of its roughly $180-million debt, bringing its debt-to-operating earnings ratio to two times from more than five times to give it more financial flexibility for acquisitions.

The board faces a few key decisions before proceeding. It needs to finalize the lead underwriting group, which is expected to include Canaccord Genuity, Bank of Nova Scotia and Bank of Montreal, which were involved in the abandoned 2018 offering. The company also needs to install a chief financial officer: Its last CFO, public markets veteran Ian MacNeily, left shortly after the 2018 offering was shelved. The board is expected to fill the role in the coming weeks.

The company is also considering including up to $25-million in stock from existing investors as part of the offering – a smaller amount than last time, but still perhaps enough to spook investors given the initial response. No decision has been made yet.

The Proud brothers previously ran OneMove Technologies, which specialized in software for real estate transactions. It assumed the name Dye & Durham – which started as a provider of office supplies to law firms in 1874 – after buying that company in 2016.

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