What lies ahead for private equity in 2016? Our annual report
covers how private equity M&A activity in 2015 has set the
stage for this year's transactions at three levels of focus: in
the markets, in the deals and in the terms.
In the Markets - changing deal strategies in the current
Private equity investors continue to face competition not only
from pension funds and strategic buyers, but also international
investors who are increasingly pursuing investment opportunities in
Canada. In this competitive environment, and in the face of
persisting economic uncertainties, investors are focusing more on
deal-sourcing strategies while managing effective sales processes
to maximize returns on exit.
In the Deals - more "public-company style" deals
in private-company auctions.
This seller's market is causing some sellers in
private-company auctions to attempt the sale of their business
"public-company style"—that is, without offering
buyers a post-closing indemnity for representation and warranty
breaches. This approach has been especially pursued in dual-track
processes where the target has been preparing for an IPO in
parallel to an auction. For buyers, an important question will be:
is representation and warranty insurance an adequate indemnity
In the Terms - U.S.-Canada private equity debt terms and
the drive for greater fund transparency.
With current market conditions expected to draw more U.S.-based
investors to Canada in the year ahead, U.S. sponsors seeking
Canadian debt financing to fund acquisitions may need to adjust
their expectations as to what's market in private equity
leverage terms in Canada. While some aspects of U.S. leverage terms
are similar to those in Canada, there are notable differences. With
respect to private equity fundraising, one trend is consistent on
both sides of the Canada-U.S. border: increased transparency of
fees and expenses is in store for 2016.
These trends are developing against a broader backdrop of global
market turns which are fostering favourable conditions for
investors to pursue new opportunities, including in the
increasingly distressed oil and gas industry in Canada. The current
environment is set to sustain private equity dealmaking in the year
ahead—whether expectations around price between buyers and
sellers will align remains to be seen.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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).