Canadian M&A Perspectives

Private and Public Mergers & Acquisitions | Private Equity

The 2016 Proxy Season: Updates to the ISS Canadian Proxy Voting Guidelines

Posted in Shareholders, Strategy

The following post on the Canadian Securities Regulatory Monitor blog may be of interest to readers of this blog:  The 2016 Proxy Season: Updates to the ISS Canadian Proxy Voting Guidelines.

On November 20, 2015, Institutional Shareholder Services Inc. (“ISS”) released its updated Canadian proxy voting guidelines for meetings on or after February 1, 2016.1 The updates provide new or updated guidance with respect to voting for equity compensation plans, electing directors with too many board appointments and electing directors of externally managed issuers such as REITs.  Read More


Universal Proxies Coming to Canada? The CCGG Makes Its Case

Posted in Public M&A, Shareholders
Fraser BourneBlake Jones

In a recent policy statement, the Canadian Coalition for Good Governance (“CCGG”) endorsed the use of “universal proxies” whenever there is a contested director election at a Canadian public company. A “universal proxy” is a proxy voting form which lists all nominees for election regardless of who nominated them (whether management or dissident shareholder). Although there is nothing under corporate or securities laws which prohibits a company or a dissident from using a universal proxy,[1] it is common practice for Canadian issuers and dissident shareholders to solicit votes with the use of proxies which only list their own nominees. Continue Reading

Cybersecurity: More than a Byte-Sized Problem in M&A

Part Two: The Transaction Agreement

Posted in Contractual Matters, Private Transactions, Public M&A
Roland HungMatthew HarrisBeverly Ma

In a previous blog entry, we offered a brief review of cybersecurity issues that can arise in the course of M&A transactions and discussed the importance of cybersecurity due diligence by the buyer. This entry will focus on contractual provisions that the buyer can request in the definitive transaction agreement to hedge against any cybersecurity risks it assumes. In particular, this blog post will focus on purchase price adjustments, representations and warranties, and indemnities. Continue Reading

Harnessing Social Media: Syngenta’s high-profile use in Monsanto bid

Posted in Canadian Market Entry, Public M&A, Shareholders, Strategy
Shane C. D'SouzaDeandra SchubertBlake JonesBreanna Needham

In our two recent articles, available here and here, we outlined how social media can influence proxy contests and identified some potential legal challenges with this development. This update focuses on the recent use of social media in the high-profile (failed) hostile bid for Syngenta AG (“Syngenta”) by Monsanto Company (“Monsanto”).


In May 2015, Monsanto made a $45 billion bid (its third bid in four years) for Syngenta. Syngenta’s board almost immediately rejected the offer on the grounds of anti-trust concerns and lack of protection for shareholders should the deal fall apart. The rejection did not end Monsanto’s pursuit and through a series of bids, the last of which was withdrawn in late August, Monsanto continued to seek support for its bid. Continue Reading

Cybersecurity: More than a Byte-Sized Problem in M&A

Part One: Due Diligence

Posted in Contractual Matters, Private Transactions, Public M&A
Roland HungBeverly Ma

In a previous blog entry, we canvassed Canadian privacy legislation and offered businesses a cursory review of the issues that arise in the due diligence phase of a business transaction. Expanding on that, this entry is the first in a series of three blog entries concerning specific cybersecurity considerations in the M&A context. This entry will focus on cybersecurity due diligence considerations, while the entries that follow will respectively discuss cybersecurity considerations in definitive transaction agreements and cybersecurity insurance. Continue Reading

Beyond Boxes: Books and Records in the (not so) New Digital Age

Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Strategy
Heidi Gordon

The recent attention surrounding cyber security is a reminder of how a company’s records are no longer stored in boxes filled with paper files. Although the (not so) new age of electronic data storage has resulted in new ways of doing business that were never before possible, it has also resulted in a host of complexities when considering how, and in some cases what, electronic records will be handed over to the buyer of a business in an M&A transaction. These complexities are compounded when a buyer is only purchasing a portion of a business, the rest of which will be maintained by the seller or sold to a different party.

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Canadian M&A Activity: Recent Insights & Trends – Part Two

Posted in Private Equity, Private Transactions
Matthew KelleherGenevieve PintoFleur Heck

In the first part of this blog post series, we looked at recent general trends in the Canadian M&A market overall, including a decline in overall transaction activity since 2009.

However, when looking at M&A activity in certain sectors or by deal value, we see slightly different trends emerging:

  • The steepest decline in activity has been concentrated at the lowest end of the market (value under $5M), where we have seen a 64% decline in the number of transactions since 2009 or an annualized decline of 18% per year.
  • At the high end of the market (value over $250M), overall transaction activity has seen strong growth, increasing by 47% since 2009 or an annualized growth of 8% per year.
  • Activity in the $10M to $100M level of the market has been resilient, with an overall decline in the number of transactions of only 7% since 2009 or an annualized decline of just 2% per year.

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Proxy Access In Canada: CCGG Proposals to Give Shareholders More Input Into the Director Nomination Process

Posted in Shareholders
Frederic CotnoirFraser BourneLaure Fouin


The Canadian Coalition for Good Governance (CCGG) recently published a policy encouraging issuers to take measures to enhance “proxy access”, meaning the ability of shareholders to have meaningful input into the director nomination process. The CCGG published this policy in the midst of a surge of voluntary adoption of proxy access by significant issuers in the United States. As of the date of this publication, we are not aware of any Canadian issuer that has adopted proxy access.

In Canada, a registered shareholder can always have a say in the director nomination process by nominating individuals from the floor of a shareholder meeting (being mindful to comply with any applicable advance notice requirements in the company’s by-laws). However, given that most votes are generally subject to management proxies submitted in advance of the meeting, a shareholder realistically seeking to have its nominees elected will have to undertake a proxy campaign in advance of the meeting (in the case of a solicitation of more than 15 shareholders, a dissident proxy circular will have to be prepared, filed publicly on SEDAR and delivered to shareholders whose proxy is solicited).

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Canadian M&A Activity: Recent Insights & Trends – Part One

Posted in Private Equity, Private Transactions
Matthew KelleherGenevieve PintoFleur Heck

Canadian M&A activity has been on a rollercoaster ride in recent years, influenced by market factors, currency fluctuations, oil prices and other economic conditions. In this two-part blog post series, we highlight some interesting trends that we have identified from our recent market review.

In spite of the apparent volatility in M&A activity in Canada, our review of market activity reveals that there have been some notable trends in recent years when looking at M&A deal activity overall.

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Earning Earn-outs: new decision affirms the dangers of not negotiating objective measures and standards in earn-out provisions

Posted in Public M&A
Shane C. D'SouzaDavid Badour

Earn-out provisions are intended to provide a “win-win” scenario for buyers and sellers to maximize their post-closing returns. However, they can also lead to post-closing controversy and litigation. For instance, what happens when the buyer’s actions divert, defer or entirely prevent an earn-out payment from being triggered? The Delaware Supreme Court’s recent decision in Lazard Technology Partners, LLC v. Qinetiq North America Operations, LLC[1] provides a cautionary tale relating to the drafting of earn-out provisions in M&A transactions.

As discussed in a previous blog post, earn-out provisions are negotiated to bridge the valuation gap between buyers and sellers. They are typically based on time or performance. Time-based earn-outs are triggered on specified dates until the final payment is made. Performance-based earn-outs are typically based on certain milestones that the parties have agreed on, such as EBITDA or net income. A downside of performance-based earn-outs is that they may be missed because of events over which the parties have no control, such as market volatility, diminished access to capital and weakened consumer demand. Or, the earn-out may be missed because of the buyer’s discretionary actions. Continue Reading