June 27, 2017
M&A trends that are prevalent in the U.S. have started being adopted by Canadian dealmakers as practices become increasingly focused on north-south relations. These trends include “materiality scrapes, representation and warranty insurance and sandbagging provisions,” and can be attributed in part to increasingly open and active trade borders.
Partner and M&A expert Sharon Geraghty commented on the changing trends in Canada with Canadian Lawyer, saying, “now, all deals are cross-border in the M&A field […] It’s rare that you’re not hunting out buyers from other jurisdictions; and so we’re across the table from U.S. parties all the time, and they’re introducing as a result the trends and the concepts that they use to Canada… We’re also seeing Canadian players becoming much more active in the U.S.”
While representation and warranty insurance in Canadian deals has become popular, it has historically been found largely in U.S. dealmaking. Partner Stefan Stauder discussed Canada’s taking on of U.S. M&A trends, saying it is not correct to assume that representation and warranty insurance stems solely from the U.S. as “rep and warranty insurance is not a brainchild of the U.S. market […] It was kicking around [in Canada] for a long time, but it was too expensive and cumbersome to use […] In the last few years, there hasn’t been a high-level deal that didn’t include representation and warranty insurance.”
Sandbagging (which you can learn more about in our Transaction Tip “Catching the Sandbagger off the Green”) and materiality scrapes are also trends gaining momentum in Canada compared to even just a few years ago.
As cross-border deals between Canada and the U.S. become increasingly popular, M&A trends will continue to change. To keep up to date, read our M&A insights.
To read the full article in Canadian Lawyer, click here.