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Evaluating the Legal Risks of Data Assets in M&A

Data is an essential asset for many businesses, and one that is increasingly acquired through M&A transactions. Identifying and assessing the particular legal challenges of data assets is crucial for acquirers to mitigate the risks associated with these assets and unlock their full value. While issues will depend on the particulars of each transaction, the following is a high-level overview of significant considerations.

What rights in the data assets is the acquiring company receiving?

Evaluating a target company’s rights to their data assets is often more complex and uncertain than for more tangible assets. Such rights are often limited by … Continue Reading

Legal update: common interest privilege in commercial transactions

On March 6, 2018, the Federal Court of Appeal reversed the decision of the Federal Court of Canada in Iggillis Holdings Inc v Canada (National Revenue).

As we discussed in a previous post, the trial court decision in Iggillis Holdings had called into question the availability of common interest privilege in commercial transactions. The trial court found that privilege with respect to a memorandum prepared by purchaser’s counsel (with input from seller’s counsel) outlining the most tax-efficient way to structure a series of transactions had been waived when it was shared on a confidential basis with the seller.… Continue Reading

Working capital adjustments: lessons from De Santis and Iacobucci v Doublesee Enterprises Inc.

In complex M&A transactions, there could be a significant delay between the initial valuation of a target company and the closing of the deal. As we explained in our previous article, “Net working capital adjustments: what’s the deal?”, parties can protect themselves against fluctuations in value during this period by negotiating purchase price adjustments (PPAs). According to the American Bar Association’s 2016 Canadian Private Target Mergers & Acquisitions Deal Points Study, the most common PPA is the working capital adjustment (which was included in 83% of recent Canadian M&A deals with a PPA).

Mechanics of

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Why have a document retention policy?

The current digital age has made it easier for companies to retain an enormous volume of documents – significantly more than a company could have afforded to keep before the advent of electronic record-keeping. In response, companies have sought to upgrade their IT systems to digitize their paper records and to allow for increased storage. These upgrades, however, are inadequate without the adoption of a comprehensive formal policy to guide a company’s record-keeping process.

Why have a document retention policy?

Besides general organization purposes, there are a few other good reasons why a company should adopt a document retention policy:… 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, the total market value of cryptocurrencies nosedived from USD $832 billion on January 7, 2018 to USD $450 billion on January 17, 2018, erasing USD $360 billion in value.

The price of the two other largest cryptocurrencies, namely, Ethereum and Ripple, dipped as much as … Continue Reading

All for one or some for all: amendment provisions in your USA

Increasingly, we are seeing clients with unanimous shareholder agreements (USAs) that allow themselves to be amended by a certain majority of the shareholders of the corporation. This makes a lot of sense for clients with small minority shareholders who they don’t want to have to chase down every single time there is to be a change to the USA. That said, it raises certain questions, both taxonomically and legally, about a “unanimous shareholder agreement” created through amendment that is not signed by every shareholder.

What is a Unanimous Shareholder Agreement?

As a lawyer, the legal question is most … Continue Reading

Data privacy in M&A: looking forward into 2018

With an ever-growing public awareness of the implications of data privacy (or rather, lack of data privacy), increased emphasis on best data practices is likely to influence mergers and acquisitions (M&A) in 2018 and beyond. Different jurisdictions have opted for varying kinds of regulations, each of which may affect transactions in unique ways. In particular, the European Union (EU) is preparing to implement new, strengthened data privacy regulations in 2018.

Looking ahead, the EU is now poised to implement the General Data Protection Regulation (GDPR). Implementation is expected to occur on May 25, 2018. … 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 retire Libor by the end of 2021, or perhaps more accurately, the FCA will cease to regulate Libor after 2021.

Several reasons, including a sharp decline in observable transaction reporting and the resultant susceptibility to manipulation have been cited as the … Continue Reading

Legal update: the Reducing Regulatory Costs for Business Act

On November 14, 2017 the Reducing Regulatory Costs for Business Act, 2017 received royal assent. While the Act is not yet in force, the new statute implements a number of initiatives designed to ensure that interactions with the provincial government are efficient and straightforward and to reduce the regulatory costs of doing business in Ontario.

The Act provides for:

  • Control of administrative costs – where a new regulation is proposed that imposes requirements on businesses, an analysis of the potential regulatory impacts must be published and, where the effect of the new regulation would be to create or increase the
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Maintaining your minute books

It seems that every other week, I come across another case of minute books put together by a private corporation that have been completed with an attitude of “this will be good enough.” Nine times out of ten, the estimate of what is good enough is off the mark, sometimes wildly. Usually, unfortunately, the point where we are finding out about minute book deficiencies is also the point where fixing them is expensive and time-consuming.

I want to focus on one aspect of proper minute book maintenance today (in part because it is the one that has bitten one of … Continue Reading

In the new world of protectionism, where will M&A stand in Canada?

Canada’s stance on protectionism

Repeated headlines in the past year related to President Trump and his “America First” strategy and the struggles faced by British Prime Minister Theresa May as she leads Britain post-Brexit have convinced many that protectionism now pervades the new world order. Not only are restrictions on physical borders imposed, the flow of investments and trade are inevitable topics being negotiated vehemently by world leaders.

Despite the protectionist rhetoric expressed throughout the globe, Bank of Canada Governor Stephen Poloz argued that “committing to openness has always been the right choice” because “[Canada’s] history shows that it takes … Continue Reading

Bank of Canada announces changes to its foreign exchange rate data

Recently, the Bank of Canada (the Bank) announced the final list of 26 foreign currency exchange rates that it will continue to publish after March 1, 2017. The list of currencies is based on the majority of foreign exchange transactions conducted against the Canadian dollar and combines the top 20 currencies by trading volume and Canada’s top 20 trading partners. This list will be reviewed and revised, as needed, every three years.

The release of this list follows a trail of changes being made in respect of the Bank’s published foreign exchange rate data. In February 2016, the Bank … Continue Reading

Artificial intelligence M&A: the new gold rush

While many people are still in shock after discovering that there is actually no human controlling the steering wheel in autonomous cars, tech companies, including Google, IBM, Yahoo, Intel and Apple, have found themselves in the middle of a gold rush for artificial intelligence (AI) companies. According to recent research by CB Insights, around 140 AI companies have been acquired since 2011, and the number of AI startup M&As has increased more than seven fold between 2011 and 2016. In fact, the race to invest in AI has been characterized as “the latest Silicon Valley arms Continue Reading

Thinking of your target’s acquisition: is your cybersecurity risk assessment sufficient?

security-680x220In 2015, we have seen several important cybersecurity breaches in the industry. Some of them have been extensively mediatized while others remained less known by the general public. Recently, the online dating website Ashley Madison was hacked and the identity of millions of users revealed all around the world. Even more recently, we learned that over 500 million users’ Yahoo accounts had been hacked in 2014 and this news came out shortly after the acquisition of Yahoo by telecom giant Verizon. Can these attacks jeopardize your upcoming transaction? They absolutely can. As a matter of fact, Verizon asked for a … 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 about resorting to non-traditional lenders?

M&A may be attractive for various reasons, many of which are common knowledge. Private companies want to grow, increase their market share, or perhaps enter a new market. At the centre of any such aspiration is the “how” question –“how … Continue Reading

Post Brexit effects

On June 23, 2016, Britain voted to leave the European Union. Financial analysts throughout the globe are bracing themselves for the potentially wide ranging ramifications of the Brexit referendum, many calling Brexit one of the most extraordinary financial events in history.  As stated in our last post regarding this subject, Britain’s exit is creating a further drag on mergers and acquisitions. KPMG has noted that six (6) M&A deals that the firm was working on have been put on hold. Moreover, inbound deals into Britain have dropped by more than 50% since the first quarter, amounting to a bleak $13.1 … Continue Reading

An overview of global M&A activity: 2015 into 2016

2015 was an extraordinary year for global M&A activity. Mergermarket recorded almost 17,000 transactions worth a remarkable US$4.3tn. This topped the previous record set in 2014 by over 30%. The race for top performing sector this year was very close. Energy Mining & Utilities won with US$630bn in deal value; however, the top performers were only separated by US$150bn. The other four sectors in order are: Pharma, Medical and Biotech, Consumer, Financial Services and Industrial Chemicals.

North America

Once again North American markets lead the way with almost 1/3 of global deals and nearly 50% of global deal value. The … Continue Reading

Bright future predicted for mid-market M&A

MergerMarket Group recently published a research report that presents the expectations of 50 industry experts based in the US and Canada on North American mid-market M&A activity. The report paints a promising picture for mid-market M&A opportunities over the next year buoyed by the increasing activity of private equity firms, cross-border deal flow along with ample financing alternatives.

Expectations in North America

Over eighty percent of respondents expected the number of North American mid-market M&A deals to increase, with the telecommunications, media and technology sector expected to see the greatest proportion of deal flow. The report emphasized a particularly healthy … Continue Reading

Global M&A Market Overview: First Half of 2013

People walking in building lobbyFollowing the declined levels of Canadian and worldwide M&A activity experienced in Q1 2013, the big question for Q2 results was whether deal-making levels would continue to lag behind the 2012 numbers. Houlihan Lokey, a global investment bank, recently released its M&A Market Overview report for the first half of 2013, confirming some of the analysts’ negative expectations. Houlihan Lokey reported that global M&A was down 18% in value and 14% in volume year-over-year. The US market experienced a more modest decline of 3% in volume, while transaction values increased 29%, largely as a result of several mega-deals announced … Continue Reading

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