Tag archives: deal valuation

Both sides of the same coin? Examining the rise of sponsor-to-sponsor deals

As competition and asset multiples increase, private equity (“PE”) firms must find new ways to put their money to work. One way to create new value is through a sponsor-to-sponsor deal.

Sponsor-to-sponsor deals involve PE firms on both sides of a transaction – buy side and sell side. Due to their high cost and complexity, there is a general view that sponsor-to-sponsor deals tend to be inefficient. However, a recent report by Bain & Company’s Annual Global Private Equity Report 2019 (Report) found that sponsor-to-sponsor deals are on the rise, which implicitly suggests that these deals may not … Continue Reading

Creating value beyond the deal

In today’s M&A market, dealmakers are increasingly under pressure – resulting from increased disruption, industry convergence, technological change and the need to shift to new business models to stay competitive – to maximize and deliver value from each deal they do. One would think, therefore, that value creation would be a priority for dealmakers. However, a recent report by PwC (prepared in conjunction with Mergermarket and Cass Business School) shows that this may not be the case.

Key findings from the report include:

  • Many acquisitions and divestments do not maximize value – even when some dealmakers think they do.
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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

The tech takeover: disruptive technology as a driver of M&A

A relentless parade of new technologies is unfolding on many fronts – one of which includes the M&A scene. While not every emerging technology will alter a business’ landscape, certain technologies have the potential to disrupt the status quo, alter the way companies operate and rearrange value pools. These “disruptive technologies” can quickly displace established systems and set new industry standards.

As an example, earlier this year, Toronto-Dominion Bank made headlines for its acquisition of “Layer 6 AI”, a start-up company which uses artificial intelligence to analyze various forms of data and anticipate an individual customer’s needs. This announcement came … Continue Reading

Reviewing the ABA 2017 Private Target M&A Deal Points Study: new RWI takeaways

For the first time, the American Bar Association’s Private Target Mergers and Acquisitions Deal Points Study (the Study) includes data points on the use of representation and warranties insurance in transactions. The Study analyses publicly available purchase agreements for transactions for which purchase agreements were executed and/or completed in 2016 and the first half of 2017 that involved private targets being acquired by public companies in the US (the Agreements).

Representations and warranties insurance (RWI) is a tool increasingly used by buyers and sellers in the context of mergers and acquisitions. As previously discussed on this … Continue Reading

Due diligence of a sophisticated seller

Paper and filesThe due diligence process can be an arduous and expensive undertaking, as previously noted by Sara Josselyn on this blog. While there is no specific approach to due diligence, it is no longer perceived solely as a buyer’s burden. More sellers are conducting what is referred to as “‘sell-side” or “internal due diligence” to attract sophisticated buyers, improve negotiations and potentially enhance the value of the transaction. This approach is gaining momentum, and coupled with today’s low interest rates, may lead to an increase in M&A deals in Canada.

Tell and tailor the business story

Sell-side due diligence is … Continue Reading

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