Articles - December 2018

  • In our 2016 review of Canadian Private Equity (PE), we reported sluggish results.  But according to the latest CVCA PE report, that’s history; Canadian PE has definitively reversed its trajectory. The second quarter yielded $8.9 billion in deal value invested over 170 transactions, an increase of 79% over the previous quarter, and 164% over Q2, 2016. 

    These results are particularly interesting in the face of today’s challenging deal environment (described so often in such similar terms, it’s achieving cliché status).  We’ve written recently, however, about how PE firms are evolving to address current challenges, and perhaps we’re starting to see the impact - although obviously, one strong quarter doesn’t constitute a trend.

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  • How to Prepare Your Supply Chain For a Different NAFTA

    Posted By: Michael Mazza and Karen Fisman

     

    As NAFTA negotiations proceed in Washington D.C., Canadians across the country are paying close attention to how an overhaul of the trade agreement could impact their businesses.

    One key issue that needs addressing is that of supply chains. Many industries, like automotive, have structured their supply chains to take full benefit of free trade with Mexico and the U.S., thus creating complex, integrated supply networks.  With input from Flavio Volpe, President of the Automotive Parts Manufacturers' Association, we consider how a different NAFTA could impact supply chains, and what companies can do to address their supply chain vulnerabilities.

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  •  

    Intralinks Annual M&A Leaks Report 2017 dives into the investigative analysis of deal leakage, drawing on a sample of 5,997 publicly traded targets. The study determined that an average of 7.7% of deals were leaked over the 2009 – 2016 period. The most compelling finding was that, over this period, leaked transactions exhibited a median premium 20% higher than deals that were not leaked.

    Does this leak premium effect also apply to privately acquisitions? We considered this question, drawing on the insights of Frank Guarascio, a senior M&A partner with Blake, Cassels & Graydon. 

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  • Economists have long tried to identify “goldilocks wages”: ideal compromises in the tradeoff between higher minimum wages and higher rates of unemployment. This is, of course, far more than a theoretical pursuit. With an election coming up in Ontario next year, it represents a significant issue that is likely to spill over from economics into politics. The province plans on raising its minimum wage from $11.40 today to $14 in 2018 and $15 in 2019. Inevitably, this plan gives rise to the question of whether, as a result, more jobs will be being outsourced or automated if employers decide they cannot afford to pay the higher wages. 

    So, how susceptible is Ontario to outsourcing or automation? And which of Ontario’s businesses are most likely to benefit from this potential push to automate?

    Please "Open in Browser" to read our full article, written by guest economics writer Joseph Shupac.

     

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  • Are we in a private equity bubble that is about to burst?   A recent Wall Street Journal article considers this question in light of increased stake sales, bigger funds, and record levels of investment capital. “Is it a bubble? My answer is no,” says one fund manager, whose view is shared by many of his peers.  In fact, despite some challenging industry dynamics, PE fund managers interviewed in the WSJ article and for a recent Prequin report share an optimistic outlook for investment activity. 

    We were curious about the Canadian PE viewpoint, so we spoke with Michael Wagman, a Managing Director at Clairvest, James Merkur, President of Intercap, and Darrell Pinto, Research Director of the Canadian Venture Capital and Private Equity Association (CVCA), to get their insights. Like many of those interviewed for the WSJ article and Prequin report, all three held cautiously optimistic views.   

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  • Negotiating Concessions in M&A Transactions

    Posted By: Chris Angelatos and Karen Fisman

    Price isn’t everything in a deal negotiation. While maximizing or minimizing price (depending on which side of the table you sit on) can make or break a deal, a shared goal of both parties to an exclusive negotiation is getting the deal done. Both sides need to feel they are getting a good deal for a negotiation to work successfully, and that means concessions should be offered, appreciated, and reciprocated. 

    What are the most effective strategies when offering up concessions? We share insights from Harvard Business  Review and get an on-the-ground perspective from M&A lawyer Jillian Swartz,  partner at Allen McDonald Swartz.

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