Topic: Finance

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Q3 2018 review: venture capital financing and deal activity decline after record-setting H1

PwC and CB Insights recently released their Q3’18 “MoneyTree Canada report” (the Report), which provides an overview of investments in Canadian venture-backed companies. According to the Report, after an exceptional H1’18 (which we’ve covered in an earlier post), Q3’18 has seen a decrease in the number of deals, as well as in dollars invested. General … Continue reading

Tokenizing securities: is it worth it?

Tokenization refers to the process of converting the right to an asset into a digital token, issued, stored, and transferred on a blockchain (the latter of which we’ve covered previously). Many real world assets can be tokenized, including fine art and real property. Of particular interest in corporate finance is the tokenization of securities, such … Continue reading

Vendor take-backs: a useful tool for financing M&A transactions

A vendor take-back (VTB) (or “vendor financing”) is a potential supplementary method of financing an acquisition transaction. It is often documented by a vendor take back note or promissory note. A VTB may be used as a type of non-consideration in conjunction with other forms of financing in order to facilitate an acquisition. In a … Continue reading

Harmonizing cash collateral perfection rules between Canada and the U.S.

In secured financing transactions, cash is a popular and useful form of collateral. It is fully liquid, readily available and transferrable, and its value is always known. A debtor holding cash in a deposit account may wish or be required to use it as collateral for obligations such as loans, repurchases and derivative transactions. In … Continue reading

Private equity and Canadian partnerships: tax considerations

Canada continues to be an attractive market for private equity (“PE“) investors with recent transactions highlighting significant investments into Canadian real estate and energy infrastructure assets. Partnerships (particularly, limited partnerships) continue to be a popular PE vehicle, providing a means of pooling and aggregating investment funds and allowing for income or losses to be “flowed-through” … Continue reading

Distressed debt investing: the basics

Whether it’s the tightening of the credit markets, a regulatory shift, margin erosion due to influx of competition, or structural changes such as in the retail industry as of late: there are plenty of reasons that get companies into deep water and create opportunities for distressed debt investing in Canada. The more difficult question is … Continue reading

Crypto update: January crash, securitized tokens and threats to traditional VC

Bloodbath in the CryptoMarket For the past three years in January, Bitcoin experienced significant price corrections. This year is no different – except for its magnitude. Likely exacerbated by an influx of new investors and a spike in actively traded altcoins, Bitcoin depreciated by almost 50% from its all-time high in mid-December. According to CoinMarketCap, … Continue reading

Maintaining perfection post-closing

In a secured financing transaction, such as acquisition financing, a creditor would often protect its interest by creating, attaching and perfecting a security interest by registration in the personal property of the debtor or the guarantor. Once a deal closes, secured creditors would often forget to monitor their registrations to maintain perfection. Post-closing events such … Continue reading

How are market participants dealing with the retirement of Libor?

Earlier this year I wrote about the Financial Conduct Authority’s (FCA) announcement in July of its plan to phase-out the London Interbank Offered Rate (Libor), the interest rate benchmark used to set payments on more than $350 trillion in financial contracts such interest-rate derivatives, corporate bonds, mortgage loans and more. The FCA’s intention is to … Continue reading

The interesting thing about M&A is…

Many predicted that 2017 would be another record year for Canadian mergers and acquisitions (M&A). There are also currently some predictions that interest rates will continue to rise despite the recent announcement of a contraction in the economy. In this blog post we consider these two factors. As depicted in Figure 1 below, while 2017 … Continue reading

How can the crowd fund you?

Crowdfunding is a great way for businesses to raise a small amount of money from a large group of people to help fund a new business venture. However, businesses who use crowdfunding to raise capital by issuing securities in exchange for the money raised need to make sure they are not violating any securities laws … Continue reading

Rising retail bankruptcies present ample opportunity for distressed investors

The recent giant retail bankruptcy filings by Toys ‘R’ Us and Sears Canada are not standalone cases in the retail sector. According to the recent Quarterly Report Of Business Bankruptcy Filings, in 2016, the United States experienced a year-on-year increase of 26% in the number of retail company bankruptcy filings. The sector generated 15.77% of … Continue reading

Overnight interest rate update: no change is good news for M&A activity

Today the Bank of Canada (the Bank) released its highly anticipated announcement regarding the overnight interest rate (the Rate). The announcement can be found in its entirety here. After previous successive Rate increases this past summer (as we reported on here), the Bank decided to maintain a steady course by keeping the Rate constant at … Continue reading

Libor retirement and implications for contracts tied to it

The London Interbank Offered Rate (Libor), the interest rate benchmark used to calculate interest rates on short-term loans by many large banks, will be phased out after 2021 according to its regulator. The London based Financial Conduct Authority (FCA) recently announced that due to growing concerns regarding the long term sustainability of the benchmark, which … Continue reading

Picking it up for a song: deal considerations when purchasing a distressed business

Although a growing body of evidence—from job numbers to stock price figures—suggests that the Canadian economy is set for strong growth this year, there will always be companies (and industries) that get left behind for one reason or another. Where those companies that cannot meet their obligations have otherwise attractive assets, it presents an opportunity … Continue reading

True sales: a refresher

Securitization remains an important tool for companies to realize value from future payment streams and raise financing, typically at a better cost of funds than the interest expense associated with a corporate loan or bond. While there are many different ways to structure a securitization transaction, it is of paramount importance to isolate the relevant … Continue reading

Distressing prospects for distressed debt?

According to a Debtwire report released this month, the North American distressed debt market will be characterized by continued volatility throughout 2017, with the oil & gas sector presenting the most attractive opportunity for investors. Financial services, industrials and real estate were also identified in the report as being ripe for investment in the coming … Continue reading

M&A transactions between fintech companies and traditional banks

Financial technology (fintech) companies like Square, Wealthsimple and Mint are already having disruptive effects in their respective industries, changing the way Canadians pay for goods and services, invest their savings, and manage their finances. A recent survey shows that Canadians are becoming less dependent on traditional banks given the variety of options to self-manage their … Continue reading

Tighter credit may turn cross-border M&A into popular growth strategy for private companies

South of the Canadian border, regulatory oversight and scrutiny continues to play a noticeable role in making it more difficult for private companies to raise capital through bank loans. In this climate, could strategic cross-border M&A become a more popular growth strategy for US companies which are unable to access traditional lenders and are unsure … Continue reading

Bitcoin update: cryptocurrency remains rare in M&A transactions despite potential

Bitcoin remains a fringe currency in the context of M&A transactions. Despite some notable advantages over fiat currency, the risks associated with funding a large transaction using the cryptocurrency have limited its use to deals between players in the Bitcoin space. This article provides an update to our previous article on Bitcoin’s viability as a … Continue reading
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