Tag archives: cross-border

Location, location, location: Where’s your chief executive office?

In the context of cross-border secured financing transactions involving Canada and the United States, the rules relating to perfection and priority of personal property pledged in favour of a lender or agent are similar. In the U.S., Article 9 of the Uniform Commercial Code governs while each Canadian jurisdiction has its own personal property security regime.

The PPSA is largely based on the UCC framework and the PPSAs of each common law Canadian jurisdiction are generally very similar to each other. There are however, a few key distinctions between the UCC and the PPSA, one of which will be discussed … Continue Reading

Global payments industry: frantic M&A activity not slowing down

A payments industry that was stagnant and stale for decades has recently entered a transformational and disruptive period of innovation, with seemingly boundless growth ahead.

Payments players have engaged in record-setting levels of global mergers and acquisitions (M&A) activity over the course of the past few years, but 2019 is poised to be yet another banner year for deal-making in the payments space. Rather than showing signs of plateau, this crescendo is set to continue beyond the immediate future.

The frenetic pace of M&A activity in the payments space recently has grown out of a confluence of factors. Private equity … Continue Reading

Treaty won, battle lost? Reviewing developments in international tax law

No one would ever suggest international tax law is simple, but with Canada’s impending ratification of the OECD’s Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the “MLI“), a new layer of complexity has been added when determining whether a taxpayer is eligible to receive a particular treaty benefit. The recent decision in Alta Energy Luxembourg S.a.r.l v The Queen[1](“Alta Energy“) might be a new high-water mark for taxpayers in treaty interpretation, but it may also be their last win.

The decision in Alta Energy considered the … Continue Reading

Note to investors: tariffs and opportunities abound in metals and manufacturing

Global trade tensions continue to be a source of uncertainty. The role of the United States as one of the most influential economies across the globe has presented limitations on the ability of many business sectors to easily absorb the trickle down effects of recent trade tariffs implemented by the Trump Administration. While this seems to present a problem for most companies that rely on international trade and distribution of products as the crux of their business, tariffs, at least if kept in place only temporarily, could create opportunities for distressed investors.

Two examples of the industries directly impacted are … 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 order to maintain a perfected security interest in this cash collateral, a lender or agent will need to adhere to the applicable methods of perfection as set forth under the applicable provincial personal property security legislation (the “PPSA”). For the reasons outlined below, … Continue Reading

Increased M&A activity predicted as insurance industry evolves

The insurance industry is an evolving landscape. The emergence of new technologies and increased competition has created pressure to innovate while casting doubt on the viability of focusing on strategies emphasizing organic growth. These factors may drive an increase in M&A activity in the insurance industry, according to a report from KPMG International.

The report, which is based on interviews with insurance executives from around the world, concludes that the majority of insurance companies are seeking M&A opportunities in an effort to deploy their capital in pursuit of transformative growth. However, these companies will likely require significant support from M&A … Continue Reading

The deemed dividend dilemma: structuring your cross-border credit support

We frequently act as Canadian counsel to lenders and borrowers in cross-border transactions where credit support is provided to a US parent company by one or more of its Canadian subsidiaries. In structuring the deal, a considerable amount of time can be spent determining the extent to which the collateral of the Canadian subsidiaries should secured.

The reason for this dilemma is because of section 956 of the US Internal Revenue Code, which creates a deemed dividend on the income of any controlled foreign corporations (CFCs) irrespective of whether or not the dividend is in fact papered … 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

Due diligence and risk mitigation in cross-border deals

As discussed in an earlier post, cross-border M&A deals are on the rise. Most businesses today are looking to unlock value from technology, emerging markets are flourishing and pursuing global investment opportunities and barriers to information have diminished. These are all factors giving rise to cross-border deals.

Transaction risk in cross-border deals

Cross-border deals come with many advantages, including the ability to expedite time to market, to scale and enhance brand recognition and to mitigate competition. However, cross-border deals are also accompanied by their unique set of disadvantages, making it all the more important to manage transactional risks.

Parties’ … Continue Reading

Hybrid entities in Canada

In the context of cross-border business transactions, the term hybrid entity is often mentioned.  Generally, a hybrid entity is considered, for tax purposes, as one type of entity (e.g., a corporation) in one jurisdiction while being considered another type of entity (e.g., a partnership) in another jurisdiction.

One example of a hybrid entity is an unlimited liability corporation (ULC).  These are Canadian corporations that are offered in Alberta, British Columbia and Nova Scotia. Shareholders of ULCs are liable for the debts and liabilities of the company. For Canadian income tax purposes, ULCs are considered corporations and … Continue Reading

Global M&A continues decline through May 2016

According to MergerMarket’s Monthly M&A Insider Report, global M&A activity continued to wane throughout May 2016, maintaining the trend reported on earlier this year. May 2016 resulted in a total of 1,054 deals worth an aggregate of US$224.5 billion, down from the 1,410 deals valued at US$372.5 billion in May 2015. Energy, Mining & Utilities, the sector with the strongest showing, lead with 80 deals worth US$40.5 billion, representing a 66.8% increase in value (but a 17% drop in the number) from deals in this sector in May 2015.

The report highlighted the following regarding global M&A activity:… Continue Reading

Strong outlook for chemical M&A in 2015

Refinery-680x2202014 was a robust year for global chemical M&A. As in many other industries, low interest rates and plentiful credit boosted global chemical M&A activity, resulting in strong performance in terms of deal flow and deal value compared to 2013. Most notably, in 2014, there were at least 13 acquisitions over US$1 billion in value, which totalled over US$52 billion in value, compared to just 8 such deals in 2013, which totalled just US$13.6 billion.

The strength of global chemical M&A over the last year has industry watchers wondering if 2015 will bring more of the same. Deloitte’s 2015 Global Continue Reading

2015 is the year of technology M&A

In recent years past, global technology M&A experienced slow first quarters. But not this year – the first quarter of 2015 set new post-dotcom-bubble records for quarterly value and volume according to EY’s report on Global technology M&A. Overall, there were 981 technology deals with an aggregate value of US $77.1 billion – a higher value than any quarter since Y2K.

The driving force behind the technology M&A boom

A main contributor to the “Year of Technology M&A” is the fact that corporate technology buyers are back in business after taking break during the fourth quarter of 2014. This … Continue Reading

Havenly acquisitions: tax inversions may contribute to M&A activity

2014 is increasingly looking like a celebratory year in Canadian M&A. Despite a mild downturn in Canadian M&A deal flow in 2013, a steady increase in high-profile transactions in 2014 suggests that M&A activity continues to gain momentum, particularly in the retail and consumer product industries. The Canadian M&A market experienced a very strong second quarter with both deal value and volume up 10% from Q1 2014 and nearly 20% on a year over year basis. A recent Canadian Business article suggests that reasons for the upturn are low interest rates, combined with an accumulation of capital in private equity … Continue Reading

The rise of cross-border M&A

The numbers are in for the first half of 2014 and they show an M&A market dominated by cross-border deals. With the advent of globalization and a renewed confidence from businesses across the world, international M&A activity is on the rise in terms of both value and market share.

In the H1 2014 Trend Report released by MergerMarket, several statistics demonstrate how robust the cross-border category has become in the global M&A market. During the first half of the year, cross-border deals accounted for 46.1% of all M&A activity. This figure represents the highest market share held by cross-border transactions … Continue Reading

Expense escrow funds are a good idea

Although expense escrow funds have become increasingly popular south of the border, they still remain relatively uncommon in Canada. An expense escrow account is a separate fund created to pay the legal fees or other expenses of the former shareholders that may arise in defending against claims post-closing. Expense escrows benefit sellers, shareholders and buyers as follows:

  • Sellers – by discouraging buyers from bringing a weak or frivolous claim, with the aim of tying-up funds in escrow indefinitely, knowing that the former shareholders will not have the means to fight it;
  • Large shareholders – by providing funds to represent the
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