Earlier this month,
we reported on the slow-down of M&A activity in the first
quarter of 2016. Despite this challenging start to the year, a new
report from Deloitte & Touche LLP entitled "M&A Trends Report 2016" found that
executives remain optimistic about M&A activity going forward.
The report provides that 87 percent of the 2,300 U.S. survey
respondents said that they expected their deal activity to match or
exceed 2015, which was the busiest year ever for mergers and
Respondents in Deloitte & Touche LLP's survey expected
that technology would be the top industry for M&A activity
through the rest of 2016, with 26 percent of corporate respondents
and 25 percent of private equity investors rating it the most
likely sector to see a growth in M&A activity. The authors of
the report opined that this may be due to the convergence of
technology with traditionally analogs sectors, an evolution that
would open a number of new opportunities for deal-making.
The report also found that there was a strong uptick divestiture
as an option to build value. 52 percent of people surveyed expected
to pursue a divestiture this year, up from 31 percent in 2014. The
authors of the report believe that this surge in divestiture
interest is underpinned by a desire for conglomerate firms to get
back to basics. By divesting non-core assets, businesses can
achieve higher value for the remaining assets.
However, the report was not uniformly bullish. 32 percent of
corporate respondents and 26 percent of private equity investors
cited global economic uncertainty as the top influence on deal
activity. Economic concerns overtook a number of other factors,
including strategy, planning, valuation, and pricing as the number
one factor in influencing deal success. Concern was focused on
European markets, such as the UK, France, and Italy, as well as
Brazil, where the economic and political upheaval have caused both
corporate respondents and private equity investors to indicate that
they would be pursuing fewer deals there as compared to 2015.
Deloitte & Touche LLP concludes that M&A activity may
pick up after its slow start in 2016. A number of positive factors
exist which could come together to feed the pace of M&A
activity, including historically low interest rates, stabilizing
equity markets, companies that are well stocked with cash, and
relatively high stock prices. As long as concern over economic
conditions doesn't continue to overshadow those positive
conditions, M&A activity may once again match last year's
The author would like to thank Scott Pollock, 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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