Despite continuing economic uncertainty in 2011, the pace of
Canadian M&A activity in the United States so far this year has
reached historic levels, according to a recent study published by
Year to date (up to November 14, 2011), Canadian entities were
involved in 385 acquisitions of US firms, representing a total
transaction value of US$22 billion and a record pace for
transaction volume. US M&A activity accounted for 40 per cent
of all cross-border deals by value for Canadian firms, making the
United States the most favoured foreign investment jurisdiction
(the next closest was Australia, with only 16 per cent of
cross-border deals by value).
For the first time in history, the value of deals completed by
Canadian firms in the US was higher than the value of US
acquisitions in Canada at a ratio of 1.16 to one. The number of
Canadian acquisitions of US targets compared to US acquisitions of
Canadian targets was also above the five year average (at a ratio
of 0.9 to one), reaching close to a ratio of 1.5 to one this
PwC identifies several drivers of this growth in Canadian deal
activity in the United States:
Scale & Scope – the US offers
investment opportunities of a greater size (larger number of
possible targets with higher valuations) and across a broader, more
diversified range of industries, than are available in Canada.
Relative Risk Levels – even with the
current difficult economic conditions in the United States, when
compared to other jurisdictions and emerging markets in particular,
the relative stability of and familiarity with investment
conditions and potential risks involved in the US market is
appealing to Canadian acquirors.
Equity Market Volatility – the
recent volatility in the public equity markets may be driving
pension funds and institutional investors to decrease exposure to
such volatility by allocating a greater portion of their portfolios
to private market investment through M&A activity.
Availability of Capital – the US
market remains a source of commercially reasonable deal capital
with the availability and cost of deal capital, as evidenced by the
US high yield and leveraged loan markets, stabilizing since Q3
PwC also identified several "hot" markets for Canadian
M&A activity in the US going forward, including energy,
financials, healthcare, high technology, media and real estate.
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
While most are well aware that the sale of a business is generally a complex process, even sophisticated business owners are surprised by just how much cost and effort is required to complete the sale.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).