Tag archives: cross-border M&A

A Slow Burn: The Cannabis Sector May be Ready for Market Consolidation

The first half of 2020 saw a significant decline in M&A activity as capital markets were impacted by the COVID-19 pandemic, but the second half of the year saw a surge in M&A activity that is expected to continue into 2021. One industry that may be particularly well primed for M&A activity in 2021 is the cannabis industry, where market consolidation is already underway.

Predictions of market consolidation in the cannabis industry are hardly novel. Even prior to the legalization of cannabis in Canada, research by Ernst & Young indicated that industry executives believed that consolidation was inevitable and would … Continue Reading

Navigating through Uncertainty: The U.S. Election’s Effect on Canadian Markets

After a highly contested election that was observed all over the world, Joe Biden – the Democratic Party nominee –  was elected as the 46th President of the United States . Leading up to the election, North American markets continued to see weeks of stagnant trading as investors held back due to the prevailing uncertainty. However, markets recovered on the eve of the vote, with the S&P/TSX composite index closing up 116.23 points.

Historical Trends

In the past, the S&P/TSX has generated better returns one year after the election of a Democratic president (+12.3%) as compared to a Republican … Continue Reading

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

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

2019 in Review: eSports edition

The eSports industry experienced monumental growth in 2019 and is well underway to becoming a financially lucrative market.

By the end of last year, eSports had over 433 million global viewers, more than American Football and rugby combined, and is expected to reach over 645 million viewers in 2020. For perspective, the 2019 League of Legends World Championship alone amassed a peak viewership of 3.98 million, far surpassing earlier eSports viewership records.

2019 also marked the year that eSports became a billion dollar industry. In line with its massive following, eSports drew in record revenues last year, experiencing a 26.7% … Continue Reading

NAFTA 2.1: Bringing certainty to an uncertain time

If there is anything that Canadian dealmakers are all too familiar with in 2019, it’s the concept of uncertainty. Raging trade wars, geopolitical tensions, elections, and a forecasted economic downturn are all pervasive in everyday conversation. Despite this, deal flow has remained robust throughout the first three quarters of 2019, as summarized in a recent post. Fortunately, significant uncertainty in relation to trade with the U.S. and Mexico is hopefully coming to an end.

Representatives from Canada, the U.S. and Mexico met last week to sign what some are calling “NAFTA 2.1” but is formally known as the Canada-United … Continue Reading

Dealing with pending or threatened litigation in M&A

A significant consideration when considering an M&A target can be the impact that pending or threatened litigation has on the proposed transaction.

While some organizations may balk at the idea of acquiring a target that is (or is likely to be) the subject of a lawsuit, such companies are often available at significant discounts to purchasers that are able to understand and address the risks.

Each transaction will have its own unique considerations. However, an organization that is contemplating acquiring a target that is the subject of pending or threatened litigation should, among other items, address the following high-level considerations:… Continue Reading

Cybersecurity in M&A Transactions: Friend or Foe?

The heavy reliance on technology in today’s data-driven world means that cybersecurity threats must be taken seriously. More specifically, with respect to M&A transactions, a target’s cybersecurity mechanisms have become an important part of the due diligence consideration. Indeed, it is important to have a firm grasp on the nature and extent of a target’s cybersecurity vulnerabilities, the likelihood of a breach, and the procedure in place to remedy a breach, if necessary. These considerations have the power to significantly alter the value of a transaction, or even derail it entirely.

With the introduction of EU’s General Data Protection RegulationContinue Reading

Canadian M&A Q3 2019 Review: Canadian M&A activity remains strong despite a slight decline in transaction volume

Crosbie & Company’s “Crosbie & Company Canadian Mergers & Acquisitions Report for Q3 2019” (the Report) reviews the minor slowdown in Canadian M&A activity in Q3 2019 following a record-breaking second quarter. While deal activity declined slightly in Q3 (776 announced transactions compared to 886 in Q2), the Canadian M&A market remained robust, posting its eleventh straight quarter (dating back to Q1 2017) with at least 700 transactions.

Highlights of the Report

  • Slight decline in transaction volume: 776 transactions were announced during Q3 2019 compared to 886 in Q2 2019, representing a 12.4% decrease from the previous quarter.
  • Non-mega
Continue Reading

Outlook for 2019: cross-border M&A and post-merger integration

Despite a general environment of uncertainty, 2018 was quite active in the cross-border M&A arena. However, observers expect a global drop for this year, especially for the mega-deals (i.e. transactions with deal values exceeding $10 billion) amid uncertainty over Brexit and the threat of globe trade wars.

Accordingly, acquirers are increasingly focusing on domestic deals rather than cross-border opportunities, and as corporate leadership remains bullish towards cross-border M&A, industry experts have suggested placing a greater emphasis on managing post-transaction integration issues.

Why? Because poor post-merger integration can hamper value creation. A mismatch of cultural fit, particularly magnified in a cross-border … Continue Reading

U.S. M&A: full speed ahead for 2019

Optimism is the name of the game for the U.S. M&A market. A recent report by Deloitte cites positive tax reform, a relaxed regulatory climate and growing cash reserves as the primary reasons for expecting 2019 to be a big year for M&A. 79% of the 1,000 U.S. corporate executives and private equity firms surveyed said their organizations will close more deals in 2019 than 2018. 70% of the respondents also expect the aggregate value of deals closed to exceed 2018, with over half of deals expected to be between $500 million and $10 billion.

Interestingly, divestitures are expected to … Continue Reading

Gauging the impact of a Canada-U.S. trade war on cross-border M&A

On May 31, 2018 the United States (U.S.) government announced that it would be imposing tariffs on a number of Canadian products, including steel and aluminum at a rate of 25% and 10% respectively. In response, the Canadian government imposed its own surtaxes of approximately C$16.6 billion on imports of steel, aluminum, and other products from the U.S. These countermeasures came into effect on July 1, 2018 and will remain in force until the U.S. repeals its tariffs on Canadian steel and aluminum.

At a market level, this escalating “trade war” between Canada and the U.S. has the potential … Continue Reading

Legal update: new European data privacy law comes into force on May 25, 2018

On May 25, 2018 the European Union’s General Data Protection Regulation (GDPR) will come into force. The GDPR will create new requirements for Canadian companies that handle the personal information of European individuals. The GDPR also allows for heavy penalties to be imposed on organizations that fail to comply with this new regulatory regime. Based on this, Canadian companies who are involved in M&A transactions should be sure to determine whether the GDPR applies to a target and carefully consider the risks associated with non-compliance.

The GDPR regulates the processing by an individual, a company or an organization … Continue Reading

Are megadeals coming back?

The year of 2017 witnessed a worldwide slowdown in the number of megadeals[1]. According to a recent Mergermarket Report (the Report), the global total for the number of deals worth US$4 billion or more decreased from a peak of 158 in 2015 and 133 in 2016 to 129 in 2017.  In Canada, the number of deals valued CAD$500 million or more decreased from 74 in 2016 to 55 in 2017, as reported by Duff & Phelps. However, there have been recent hints suggesting that the spring for megadeals is just around the corner.

After polling the … Continue Reading

Regulatory reform signals potential spike in M&A activity involving US financial institutions

On March 14, 2018, the US Senate voted (67-31) to advance S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Bill). The Bill, which will only become law with approval from the House and Congress, marks an unprecedented, bipartisan compromise to ease banking rules enacted following the 2008-09 financial crisis. If enacted, there may soon be good reason to anticipate a spike in M&A activity among mid-sized US financial institutions, including a possible increase in cross-border M&A activity involving Canadian institutions.

Proposed changes: an overview

Under current law, financial institutions with $50 billion or more in … Continue Reading

Cross border M&A in 2017

Following the surge of mergers and acquisitions in the final quarter of 2016, many attempted to predict whether 2017 would follow suit. For instance, the Financial Times anticipated that the increase in mergers and acquisitions would carry into 2017. Similarly, JP Morgan forecasted that companies would adapt and cross-border deals would continue to surge, despite political changes and uncertainty, such as the Brexit referendum and the change in administration in the United States. In fact (and as predicted), the growth of cross-border transactions has been significant. Bloomberg Law reported that in 2017 thus far, there has been a total of … Continue Reading

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