M&A Opportunities in the COVID-19 Digital Transformation

While the COVID-19 pandemic initially had a general chilling effect on merger and acquisition (“M&A”) activity, we have seen an increase in M&A activity recently, particularly as industries rapidly adapt to the new environment and consider opportunities. Both consumer preferences and business models have been forced to change quickly due to the circumstances of the pandemic. This period of transformation provides opportunity for those investors and businesses who are able to efficiently adapt and take advantage of the new trends.

Increased Demand for At-Home Services:

The pandemic has transformed consumer preferences which has created tremendous potential for certain … Continue Reading

Speaking the portability language: How portability clauses are helping debt-laden companies enter into M&A transactions

There is no doubt that the Covid-19 pandemic has resulted in unprecedented social and economic ramifications, including a decline in M&A activity in Canada. The pandemic has also brought in changes to the way agreements are being drafted in light of what has become our new normal. Earlier, we reported that the pandemic has led to an increased focus on earn-out provisions in both existing and new M&A deals. A recent trend also emerged in lending transactions, where lenders are agreeing to include portability language in loan documents, which may remove an obstacle for private equity groups that are looking … Continue Reading

Representations and Warranties Insurance and COVID-19 Considerations

The use of representations and warranties insurance (RWI) has grown dramatically in recent years as buyers (and to a lesser extent, sellers) have increasingly relied on RWI to allocate risks and provide other benefits in M&A transactions. The COVID-19 pandemic and its economic impacts have led to significant uncertainty for buyers, as well as for the RWI insurers underwriting their transactions. However, as we have grown more knowledgeable about the effects of the pandemic, both the M&A market and RWI insurers have adapted to the meet the changing times.

What is RWI

RWI is used by transacting parties … Continue Reading

Determining fair value in appraisal proceedings: the Supreme Court of Canada dismisses application for leave to appeal in Carlock v ExxonMobil Canada Holdings ULC

On August 13, 2020, the Supreme Court of Canada (the SCC) dismissed the application for leave to appeal in the case of Carlock v ExxonMobil Canada Holdings ULC (Carlock), indicating that the negotiated deal price in a transaction between well-informed, sophisticated, arms-length parties that is the result of a vigorous sale process provides strong objective evidence of fair value in appraisal proceedings before Canadian courts. This aligns with the recent U.S. decision in DFC Global Corp. v Muirfield Value Partners, LP, where the Delaware Supreme Court strongly endorsed deal price as often “the best evidence of … Continue Reading

M&A in the Consumer & Retail Sector: Before and After the Pandemic

This article will provide a high level discussion of M&A trends in the Consumer & Retail (C&R) sector, beginning with a brief summary of the activity we saw in 2019, what trends were anticipated to occur in 2020 and how the COVID-19 pandemic (the Pandemic) is expected to affect M&A in this industry.

Pre-Pandemic Trends

Earlier this year, KPMG published their Global Consumer & Retail M&A Outlook 2020 Report (the KPMG Report) which reviewed deal activity in the C&R sector in 2019 and provided insight about the expected trends for 2020. As was seen in preceding … Continue Reading

The SPAC is back: going public in a pandemic

According to Axios, the first half of 2020 saw special purpose acquisition companies (“SPACs” for short) in the U.S. raise over US$20 billion, easily eclipsing the US$13.3 billion raised in all of 2019. A SPAC is a special purpose vehicle that does not have any assets or operations, but exists solely for the purpose of raising money in the public markets with the aim to acquire an operating business (or several businesses). Of the recently launched SPACs, many are run by well-known investors who bring substantial amounts of capital and experience to the SPAC with them.

Even in the … Continue Reading

COVID-19 Series: Considerations and Modifications of Certain Provisions in M&A Agreements (Valuation and Post-Closing Pricing Mechanisms)

In recognition that businesses are adjusting to their “new normal” and some companies are exploring acquisitions or divestitures as opportunities to strengthen their bottom line, we will be publishing a series of blogs aimed at highlighting some of the considerations and key drafting areas in a purchase and sale agreement that parties to Canadian private M&A transactions should consider in light of the COVID-19 pandemic.

Valuation Gaps

The impact of COVID-19 creates a lot of challenges in determining the valuation of a target – which ultimately, helps the parties determine the price of the shares or assets being sold/purchased. For … Continue Reading

Fintech M&A Activity in 2020: The Digital Economy is Here

Paying for Payments

While uncertainty arising from the COVID-19 pandemic has slowed down most deal activity, Fintech, in particular the payments space, is a big exception. Recent analysis from KPMG revealed that UK payment deals in the first quarter of 2020 alone exceeded the total number of deals in 2019. Granted, deal sizes were relatively low value, but the incredible rate highlights how the usual frantic activity in this area has only been propelled by the unique challenges this pandemic has presented, namely the need to switch to cashless and contactless transactions. Canadian Fintech is also poised for more deal … Continue Reading

Threading the Needle: Drag-Along Clauses and Asset Deals

While continued economic uncertainty has dampened M&A activity in the past months, the transition from crisis management to recovery mode in the short to medium term will likely see many companies explore potential divestitures in an effort to dispose of underperforming assets, to increase cash on hand and business resiliency and to mitigate risk.

When seeking approval for divestitures, many companies that have a shareholders’ agreement in place rely on drag-along provisions contained therein to quickly approve the transaction. However, in the context of an asset sale, the applicability of a drag-along is not always clear and both sellers and … Continue Reading

(Re) Starting-Up: Corporate records are the key to M&A in the age of COVID-19

M&A as a catalyst for recovery

As many jurisdictions begin to ease restrictions on commercial activities, economic uncertainty remains and the landscape of M&A activity is undoubtedly very different from early 2020 pre-COVID-19. As you begin to lead your company towards recovery, it is worth noting that in the midst of such upheaval, there are a number of promising indicators for the future of M&A activity and steps you can take to maximize your company’s chances of success.

In a recent global survey of 2,900 C-suite executives released at the end of March, EY found that “despite unprecedented social and … Continue Reading

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