Outbound deal activity to the U.S. on the horizon for year ahead

Partner John Emanoilidis has told the Globe and Mail he expected to see a solid level of Canadian outbound deal activity to the U.S. in 2019.

The article details how Canadian companies are searching for appropriate M&A targets and despite the “chaotic politics and trade uncertainty” in the U.S., it still remains the number one destination.

The piece also references an article authored by John and a group of Torys lawyers in the Q1 Torys Quarterly, titled “World events will set the tone for Canadian M&A in 2019.”

John said the turbulence in the U.S. due to President Donald Trump’s corporate tax rate cut last year didn’t have the predicted negative effect on Canadian outbound deal activity to the U.S.

“Unpredictability tends to chill deal activity because it has the potential to affect confidence levels,” John told the Globe and Mail.

“But having said that, financing remains readily available, strategic buyers and private equity firms have a tremendous amount of cash to deploy and based on the deals we have in the pipeline, we’re quite optimistic that we’re going to see outbound activity,”

John echoed these comments in a separate piece he did in conjunction with Citigroup which also discussed Canadian outbound investment.

“Companies that have reached a certain scale in Canada must often look abroad for growth. These companies have enormous amounts of cash to invest but have limited opportunities to scale up within Canada,” he said.

The Q1 Torys Quarterly discusses a number of investment themes, including Canadian M&A and Chinese investment into Canada.