Last week's announcement of a
proposed transaction in the food and beverage
industry for a staggering US $107 billion does not stand
alone as a mega-deal in 2015, according to a recent Mergermarket report. The deal is part of what
has been a record year for deal valuations. Through the first three
quarters of this 2015, there have been a total of six deals worth
more than US $50 billion. As a result of these mega-deals, deal
value has totalled US $2.7 trillion, up 21% from the first three
quarters of last year.
The report lists a number of factors that analysts believe have
contributed to this year's record deal valuations:
Cheap debt. As permitted by low interest
rates, cheap debt has raised the ceiling in terms of the price
companies are actually able to pay.
Shareholder pressure. The pressure to generate
increasing dividend payouts has pushed management to pursue deals
Industry-specific factors namely the tech boom and
consolidation. Companies are feeling the need, now more
than ever, to invest in mobile technology as well as in internet
security, or else risk being left behind. In addition, slumping
commodity prices and an over-competitive market have pushed players
in commodity-based industries, such as the oil and gas industry, to
Slow organic growth. The inability to grow
internally has forced companies to look externally in order to
remain competitive. Analysts believe this factor to be the biggest
contributor to the year's run of high deal valuations.
Analysts remain confident mega-deals will continue for the near
future. In spite of record deal valuations, analysts believe we are
at least a year or two away from experiencing a valuation bubble
As mega-deals persist, one of the primary legal challenges will
be staying onside of anti-trust legislation. Parties to these deals
should not expect regulatory approval to come easily and should
anticipate delays and increased costs. Failure to minimize the
costs and delays associated with anti-trust compliance could spell
the end of the mega-deal.
The author would like to thank Michael Viner, articling
student, for his assistance in preparing this legal
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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.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan 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.
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