January 04, 2007
The booming level of mergers and acquisitions in Canada is expected to continue in 2007, while an increasing number of public companies will go private.
According to Torys' special edition bulletin, Top 10 Trends for 2007, the vast amount of capital in private equity funds, an ageing population looking to exit their businesses, and the rigors of being publicly listed could all lead to a "perfect storm" that drives many more companies into private hands.
"Private equity firms are sitting on a growing amount of cash and are looking for a place to park it," says Phil Brown. "There are a large number of family-controlled companies in Canada reaching an age where it's a good time to sell, and private equity are attractive buyers. Governance also costs a great deal of time and effort, both for cross-listed companies to comply with Sarbanes-Oxley, and for companies here that are dealing with 'S-Ox North.'"
M&A deal values in 2006 in Canada nearly doubled to US$173.6 billion, according to a report by KPMG Corporate Finance. The number of deals also soared to 1,720, a 26% increase over 2005.