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Bitcoin Accepted Here? Funding M&A Transactions by Way of Bitcoin

Posted in Private Equity, Private Transactions, Strategy

There is no denying the increasing popularity and notoriety of the virtual currency Bitcoin.  Bitcoin market capitalization currently stands in the billions of dollars, with over 13 million Bitcoins having been mined and made available for circulation.  An increasing number of merchants, including Dell, have begun accepting payment by way of Bitcoin.  The list of goods and services that have been purchased with Bitcoin now includes university tuition, airline tickets, cars, and pizza delivery.  Some companies have started paying employees in Bitcoins.  Canada in particular has been a world leader in Bitcoin ATM’s: the first Bitcoin ATM in the world … Continue Reading

A Graceful Exit

Paying Out Credit Facilities in Connection with an M&A Transaction

Posted in Private Transactions

It is quite common that an existing credit facility has to be paid out in connection with the completion of an M&A transaction, as a result of, for example, a new credit facility being put in place to finance the acquisition which replaces the purchaser’s existing credit facility, or as a  result of both the purchaser and the target having separate credit facilities in place prior to the transaction, only one of which will be required going forward.

The process of paying out an existing credit facility should be quite straightforward as long as proper consideration is paid to the … Continue Reading

You Say UCC, We Say PPSA.

A discussion of the Canadian equivalent of the UCC - the Personal Property Security Act in the context of an M&A transaction.

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

Although we often think of the regimes that govern registrations made against personal property as a concern to lenders and their counsel, M&A lawyers and business people are unable to escape this area of the law… at least not completely. As part of the legal due diligence process in almost any M&A deal, registrations against the target’s assets will be uncovered. As such, the target and its counsel will want to ensure that any disclosure surrounding these registrations lines up with the representations made in the purchase agreement, and the buyer and its counsel will want comfort surrounding the scope … Continue Reading

Personal Property Security Estoppel Letters: What Are These and Why Are They Needed?

Posted in Public M&A, Strategy

The concept of an “estoppel letter” (also sometimes referred to as an “acknowledgement”, “waiver” or a “collateral narrowing letter”) in respect of personal property security registrations can be quite puzzling to US clients, as it is a much more common practice to obtain these in Canada than in the United States. However, purchasers in an M&A transaction often rely on estoppel letters for comfort that they are purchasing a target company’s assets free of any liens.

What is an estoppel letter? An estoppel letter is an acknowledgment obtained from a prior secured party (identified through personal property security searches – … Continue Reading

Financing the Acquisition of a Canadian Business: Cross-Border Credit Transactions

Posted in Contractual Matters, Private Transactions, Public M&A

The acquisition of a Canadian business by US-based purchasers is often financed by way of a cross-border credit transaction involving a Canadian borrower (such as when the US purchaser sets up a Canadian company to make the acquisition, often for tax reasons), possibly also a US borrower (or as is common when a new Canadian company is set up to make the acquisition, a US guarantor), and some combination of Canadian and foreign lenders. In cross-border credit transactions involving a Canadian borrower, certain particularities of Canadian law should be kept in mind when structuring and negotiating documentation:

Five Considerations for Borrowers Completing a Disposition

Posted in Contractual Matters

In my prior post, Seven Considerations for Borrowers Completing an Acquisition, I described seven key issues that borrowers should consider when completing an acquisition.   Similarly, if your company is considering a disposition (either of assets or of shares) and is a borrower under a credit facility, it is important to consider whether the proposed disposition will result in a breach of any of the provisions of your credit documentation.  Here are five key questions to ask when undertaking a disposition:

  1. Is the disposition permitted under the credit agreement? Many credit agreements contain negative covenants that prohibit dispositions without consent
  2. Continue Reading

Seven Considerations for Borrowers Completing an Acquisition

Posted in Contractual Matters

If your company is considering an acquisition, and it also happens to be a borrower under a credit facility, it is important that you review the credit documentation to ensure that the acquisition will not result in a breach of any of the provisions. Here are seven key questions to ask when identifying possible issues under the credit documentation when undertaking an acquisition:

  1. Is the acquisition permitted under the credit agreement? Most credit agreements contain negative covenants that may prohibit acquisitions without consent of the lenders, or may allow only certain types of permitted acquisitions.
  2. Does the credit agreement permit
  3. Continue Reading