Tag archives: private equity

Performance incentives for portfolio companies

Private equity investors (PEIs) when investing in new portfolio companies, seek to align management’s interests with that of the PEI to grow the value of the portfolio company and achieve a profitable return in the investment upon exit.

Typically, PEIs incentivize management to adopt such interests through compensation arrangements in  the form of performance incentives. Generally, PEIs will grant management an interest in the growth in value of the company via an interest in the equity of the company (e.g., stock options or performance shares) or in the profit/proceeds of the company, the latter of which is … Continue Reading

Private equity investments and common governance rights in investee companies

Private equity investors (PEIs) are often a good source of capital for companies looking to start, maintain, or grow their operations and can also provide significant operational and transactional expertise. Like other investors, PEIs operate with a primary goal in mind; that is, to receive a favourable return on their investment. However, PEIs generally seek to have a greater level of involvement in an investee company than other investors.  Accordingly, PEIs commonly negotiate for certain governance rights in the company via a unanimous shareholder or limited partnership agreement in order to maintain a certain level of oversight over … Continue Reading

An overview of global M&A activity in May 2015

In the month of May 2015, global mergers and acquisition activity was calm as deal value totalled US$348.1bn, which represents an increase of 14% since April 2015 and an increase of 27% over May 2014. However, total deal volume fell 8.5% since April and 30.9% compared to May of the previous year, with a total of 984 deals. Technology, Media and Telecommunications was the most active sector in terms of value and volume of transactions, accounting for 58.5% of the month’s top 10 in terms of overall value. Much of this activity was concentrated in the US, where 8 of … Continue Reading

Foreign investors eye Canadian companies

Canadian companies are becoming increasingly attractive to American and European companies as targets of foreign investment according to a recent article from the Lexpert Special Edition on Canada’s Leading Corporate Lawyers, published within the June edition of The Globe and Mail’s Report on Business Magazine. The Lexpert article states that both U.S. and U.K.-based investors in particular are increasingly turning their attention to Canada for M&A opportunities.

According to the Lexpert article, which surveyed leading Canada’s leading M&A corporate lawyers on the topic, American companies are the main source of cross-border deal activity, due in large part to … Continue Reading

Future of private equity leveraged buyout financing optimistic

Recently, RR Donnelley sought the assistance of Mergermarket Group to interview professionals in the US, Europe, and Asia-Pacific about leveraged buyout financing. Mergermarket Group published its survey results on the environment of leveraged buyout financing in its April 2015 edition of the Venue Market Spotlight.

Availability of buyout financing

A majority of survey respondents indicates that the availability of buyout financing will increase in the next 12 months. Specifically, 52% of respondents state that buyout financing will somewhat increase, while 8% of respondents believe that buyout financing will increase significantly. However, 32% of respondents expect buyout financing to decrease … Continue Reading

Common liquidity rights in private equity investments in early stage companies

Early stage companies face an uphill climb in growing their business and ensuring their viability going forward. Private equity firms can provide capital as well as significant operational and transactional expertise to aid in a company’s growth. However, private equity investors often intend to exit any investment within a defined time period. As a result, private equity investors frequently demand concessions prior to investment to avoid exposure to liquidity risk. Common liquidity mechanisms sought by private equity investors include drag-along rights, and registration rights.

Drag-along rights and tag-along rights 

Private equity investors will frequently attempt to negotiate the inclusion of … Continue Reading

M&A trend summary: H2 2014

MergerMarket Group recently published its January edition of Monthly M&A Insider which reported on mergers and acquisitions activity around the world during the second half of 2014. Among other things, the report explains why 2014 was so hospitable to M&A activity, citing an improving economy, large cash reserves, low interest rates, and cheap financing as contributing factors.

M&A worldwide

Overall, there were 16,588 reported deals in the second half of 2014 worldwide, worth roughly $3.2 trillion; this surpasses the previous record, in the second half of 2007, of 16,060 transactions, worth roughly $3.7 trillion. Just under half of the total … Continue Reading

M&A trends in the Middle East

Deal-making in the Middle East is on the rise. Consumer confidence is improving, credit is more readily available, and capital markets are maturing. However, the region still faces several challenges as investors remain cautious, looking for increased due diligence and post-closing protection.

Encouraging trends

According to speakers at the Megatrends in Mergers & Acquisitions conference in October, 2014, private M&A in the Middle East has been dominated by family businesses looking to divest core assets and private equity looking for growth. Outbound activity is limited because investors see growth prospects within the region. Global private equity players are becoming … Continue Reading

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