2015 was a huge year for global M&A with deal activity
reaching $4.2 trillion by the middle of December. If 2016
continues at the same pace, be prepared for a big year of M&A
activity. In order to be well equipped for the upcoming year, ask
yourself the following two questions when contemplating an M&A
Where are the key market opportunities?
According to the publication released by Raconteur entitled M&A Outlook 2016, on a global scale, five
sectors are "blazing a trail": financial services,
telecommunications, pharmaceuticals, computer manufacturing, and
oil and gas.
Financial Services – Consolidation is
the new buzzword in the financial services sector. Complex
regulatory regimes and the volatile economic environment has
wealth managers, asset management firms, and lenders seeking
opportunities to increase scale and growth as a long-term
Telecommunications – There is always
competition to be the biggest and the best in the
telecommunications sector. M&A activity is driven by the
increasing demands of consumers for greater convergence of
services. Joining forces is a smart strategic move in such a
capital-intensive industry. Similar to the financial services
sector, consolidation, particularly in the European market, can be
Pharmaceuticals – In the pharmaceuticals
industry, companies compete on the basis of scale, efficiency, new
markets and innovations. The combination of Pfizer and Allergan,
representing the biggest pharmaceutical deal throughout history,
will likely trigger M&A activity in 2016.
Computer Manufacturing Silicon Valley is
ripe with deal activity. The need to diversify and increase
economies of scale is key in the computer manufacturing
sector. Steve Mollenkopf, CEO of Qualcomm, believes there
will be tremendous growth in computing and resources dedicated to
supporting the cloud.
Oil & Gas – The difficulties
faced by the oil and gas industry are unparalleled. Plunging
oil prices has put pressure on companies to minimize costs leading
to structural changes and M&A activity. In 2015,
transactions in the oil and gas sector focused on asset disposals
but, if prices begin to stabilize, in 2016 oil and gas players may
engage in larger transformational deals.
Is there an algorithm for valuing a
Advancements have been made to help buyers and sellers arrive at
a single dollar figure but, according to Doug McPhee global head of
valuation services at KPMG, "when it comes to judgment, even
the most technically correct valuation is dependent on what a
potential buyer would pay for a business in the current
Intangible assets such as a company's brand are very
difficult to quantify. With that said, the International
Organization for Standardization has established seven approved
accounting techniques with the aim of standardizing brand
valuations. Ideally, these methods would result in consistent
valuations among leading algorithmic valuation services; however,
this has not been the case.
Valuation service firms input anywhere between 10 and 60 data
elements to arrive at a valuation of a company. The downside
is that the Apple brand, for example, has been valued at anywhere
between $128 and $246 billion among leading valuation
agencies. These large valuation gaps ultimately lead one to
question the usefulness and accuracy of algorithmic valuation
services and standardized accounting techniques.
Norton Rose Fulbright Canada LLP
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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.
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.
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