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Category Archives: Contractual Matters

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Challenges for State-Owned Enterprises Arising From Proposed Amendments to the Investment Canada Act

By Oliver J. Borgers and Michele Siu on Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, Strategy

The Canadian government’s Bill C-60 contains proposed amendments to the Investment Canada Act that will significantly impact foreign investors whom the Canadian government considers as state-owned enterprises (SOEs).  An investor might be an SOE even if a foreign state only indirectly “influences” the investor.  Under these amendments, if the Minister of Industry determines that an… → Read More

Ignorance is not bliss: beware minimal due diligence

Lessons from the Quebec Court of Appeal

By Martin Boodman and Shane C. D'Souza on Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, Strategy

The Quebec Court of Appeal’s decision in Francoeur v. 4417186 Canada Inc., 2013 QCCA 191, provides a cautionary tale on the dangers of entering into a share purchase agreement and subsequently closing a share purchase transaction, without ample due diligence. The one-sided apportionment of risk The Francoeur share purchase agreement (the “SPA”), which was signed… → Read More

Doing Business in Canada – 2013 Edition

Buying a Canadian Business, eh? A look back.

By Robert Hansen and Heidi Gordon on Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, Strategy

Last Spring we announced a special series of blog posts aimed at addressing some of the most significant distinctions between Canadian and US law that ought to be considered in the early stages of the proposed acquisition of a Canadian target. Following the launch of that series our team blogged about important topics like: Financing… → Read More

Good Faith in the Shadow of Contractual Rights

By Brandon Kain on Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Strategy

Most M&A contracts contain provisions that confer discretionary contractual powers on one or both parties to the transaction (e.g., the right to withhold consent to an assignment).  One of the most pressing questions in modern contract law is whether the party in possession of such a power must exercise it in good faith. In Bhasin… → Read More

Defined Contribution Pension Plans: Uncovering the Wolf in Sheep’s Clothing?

By Mark Firman on Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Strategy

In my last post, I briefly canvassed the differences between defined benefit (DB) and defined contribution (DC) pension plans.  I cautioned that, due to their perceived financial predictability and apparent straightforward nature, DC plans don’t always get the attention that they deserve from buyers undergoing the due diligence review of a target. While DB plans… → Read More

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.

By Ana Badour and Heidi Gordon on 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… → Read More

Defined Benefit Versus Defined Contribution Pension Plans: The Basics

By Mark Firman on Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Strategy

When purchasing an existing business, many buyers are understandably reluctant to assume obligations under a target’s defined benefit (DB) pension plan. Under a traditional DB plan, members (i.e. plan participants) are entitled to a guaranteed pension amount calculated by a formula. While active employees may contribute to such plans, each Canadian jurisdiction’s laws place the… → Read More

Plugging (You Into) Even More Online M&A Resources

More Online Resources for Deal Makers – What you should know about (Part 2 of 2)

By Ian C. Michael and Lama Sabbagh on Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, Strategy

In our last post, we looked at six traditional resources and more sophisticated paid services that help bring us up to speed in the M&A world. In this post we will list some of the more contemporary deal commentary resources:     NY Times DealB%k: This blog delivers the latest news on mergers, acquisitions, venture… → Read More

Plugging (You Into) Online M&A Resources

Top 6 Online Resources for Deal Makers – What you should know about (Part 1 of 2)

By Ian C. Michael and Lama Sabbagh on Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, Strategy

Whether you’re a seasoned deal maker or just starting out, we all rely on various resources to stay apprised of the cutting edge developments in M&A. Given that the latest information is driven by online resources, we thought it would be appropriate to put together a list of our favourite resources that help keep us… → Read More

Go-Shops in Canada

Go-Shop Provisions in Canadian M&A Transactions: Advantages, Disadvantages and Considerations

By Max Thelonious Rogan and Mason Gordon on Posted in Contractual Matters, Public M&A

It is quite common in negotiated acquisitions for companies to perform a pre-signing market canvass and to enter into an acquisition agreement that contains a “no-shop” provision with a fiduciary out clause for unsolicited third-party proposals, as well as a break fee payable in the eventuality of the target company accepting a superior offer.  Less… → Read More

Hot Off the Press – Updated Canada Tax Service Quick Reference Guide 2012

By McCarthy Tétrault LLP on Posted in Contractual Matters, Private Equity, Private Transactions, Public M&A, Shareholders, Strategy

For those interested, the updated edition of McCarthy Tétrault’s 2012 biannual Canada Tax Service Quick Reference Guide is now available on Thomson Reuters/Carswell’s website. The handy booklet is an excellent reference tool for tax practitioners, financial advisors, businesses and individuals seeking pertinent tax rates and facts. Ylang Ha, Douglas Cannon, Frédéric Harvey, Nigel Johnston, Gabrielle… → Read More

The Rising Trend of Reverse Break Fees

By Leila Rafi and Tyler McAuley on Posted in Contractual Matters, Private Transactions, Public M&A, Strategy

Break fees have for many years been a conventional deal protection feature of public M&A transactions. These fees, often referred to as termination fees as they are tied to the termination provisions in the contract containing the deal terms, are typically payable by a target company where it elects to end an agreement for an… → Read More

Under the Hood: Guidelines for Drafting Material Adverse Change Clauses

By Tyler McAuley on Posted in Contractual Matters, Private Transactions, Public M&A, Strategy

There are a number of ways in which a MAC clause can be drafted. Typically, these provisions begin with a broad definition of the type of event that will constitute a “material adverse change” on the business or assets being acquired. This is often followed by a list of explicit “carve-outs” which designate the events… → Read More

MAC Primer: An Overview to the Material Adverse Change Clause

By Tyler McAuley on Posted in Contractual Matters, Private Transactions, Public M&A, Strategy

In most acquisitions, the distance between signing and closing is measured in weeks, if not months. During this interim period the buyer’s ability to safeguard or control the target’s business is limited. This is an uncomfortable position that can be exacerbated if the transaction is consummated between strategic competitors or in a market with substantial… → Read More

MAC-Ademy: An Introduction to the Material Adverse Change Clause

By Cristian Blidariu, Waleed Elgohary and Tyler McAuley on Posted in Contractual Matters, Private Transactions, Public M&A, Strategy

Recently, a curious team of our M&A bloggers presented an internal roundtable discussion aimed at understanding some of the key issues regarding material adverse change (otherwise known as “MAC”) clauses. Part of what came out of that discussion is a presentation that provides an introduction to the MAC clause and some analysis regarding current trends… → Read More

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

By Ana Badour on 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… → Read More

Five Considerations for Borrowers Completing a Disposition

By Ana Badour on 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… → Read More

Canadian Contractual Interpretation Law: A New Edition

By McCarthy Tétrault LLP on Posted in Contractual Matters

The second edition of Canadian Contractual Interpretation Law by Geoff Hall (one of our contributing bloggers) has just been published. The book is the only text focused on contractual interpretation under Canadian common law and the new edition includes commentary on contractual interpretation under Quebec civil law. As such, it is a helpful resource for… → Read More

The Implied Covenant of Good Faith and Fair Dealing: Delaware Rocks On

By Robert Hansen on Posted in Contractual Matters

Earlier this month, the Delaware Court of Chancery released its opinion in Winshall v. Viacom International, Inc. The Court dismissed a claim for breach of the implied covenant of good faith and fair dealing in a merger agreement. The sellers of Harmonix Music Systems, Inc., the creator of the music-oriented video games Rock Band and Guitar… → Read More

Earn-outs – Key Considerations in M&A Transactions

By Vanessa Grant on Posted in Contractual Matters, Private Transactions

This post was co-authored by Marek Lorenc, an articling student in our Calgary office. In recent years, and particularly since the financial crisis, earn-outs continue to find favour in private (and occasionally public) acquisitions as a means of bridging the valuation gap between purchasers and sellers. The drafting of earn-out clauses can be challenging, as… → Read More

M&A Deal Terms – What’s Market?

By W. Ian Palm on Posted in Contractual Matters

There’s an ever-growing list of reports and studies that collect, analyze and scrutinize various deal terms and other aspects of M&A transactions – or at least it feels that way. Like most committed M&A lawyers, we collect this stuff and I, for one, admit to spending a fair bit of time pouring over some of… → Read More

Which M&A Representations Do I Really Need?

By Robert Hansen on Posted in Contractual Matters

M&A lawyers often get stuck negotiating pages and pages of representations and warranties in purchase agreements on behalf of their buyer clients. So let’s say I am stranded on a desert island negotiating with “Wilson,” the volleyball, for the purchase of a coconut water business. Wilson will only give me five representations in our purchase… → Read More