Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/1544329
8 www.lexpert.ca Special Promotional Feature Higher hurdles: Canada's new regulatory reality e one caveat to an otherwise constructive picture is a growing protectionist undercur- rent. With Canada prioritizing domestic consolidation and structured partnerships, Ungerman sees heightened regulatory review of foreign acquisitions under competition and foreign investment regimes. Recent changes to the Competition Act and Investment Canada Act, as well as an increasingly expansive nationalsecurity lens, reflect that. How can practitioners get ahead? Start the clock early, Ungerman says. A recent transaction with a foreign acquirer buying into Canada tripped the Competition Act thresholds, prompting him to engage earlier with the Competition Bureau to secure their pre-blessing to file for an advanced ruling certificate. "That was on our radar screen very early in the deal timeline because the reach of regulators is becoming wider and it's not always readily apparent what might draw scrutiny," Ungerman explains. "Think broadly and engage specialists about the industry at hand," he says. "Focus on any permutations that could impact deal certainty or conditionality." The proactive capture the upside Ungerman's main advice can be distilled into one word: proactivity. Identify poten- tial competition, foreign investment, and financing hurdles as early as possible and stresstest deal structures sooner rather than later. "Approaching transactions with disci- plined preparedness and flexibility allows us to be nimble in an uncertain environ- ment," says Ungerman. "There's mean- ingful opportunity in Canadian M&A − the best-prepared players are the ones who will seize it." "When you look at factors like exchange rates, Canada is very attractive right now," he says. "Inbound investment is hot − particu- larly where assets align with policy priorities and national security considerations." Flexibility keeps transactions moving With debt markets more difficult to access in some respects, Ungerman says buyers are increasingly relying on flexible deal structures to get transactions across the finish line. Earnouts have become more prevalent in private M&A, for example, allowing parties to allocate a portion of the purchase price to future performance and stage payments over time rather than funding the full consideration upfront. at both eases immediate cash demands and helps mitigate risks arising from market uncertainty. That said, private credit is certainly avail- able to support larger transactions, while some acquirers have sufficiently deep pockets to proceed without thirdparty financing at all, giving them an edge in a choppy market. Ungerman is confident that good opportunities find financing, especially where targets sit in those priority sectors or align with policy objectives. He stresses the importance of engaging on financing early and running that work- stream in parallel with the M&A process so parties don't secure deal certainty on paper only to discover the funds aren't there at closing. "It's perhaps a more challenging environ- ment, but not insurmountable," he sums up. OPPORTUNITY AMID VOLATILITY IN CANADIAN M&A NORTON ROSE FULBRIGHT'S TROY UNGERMAN SEES RESILIENT MIDMARKET ACTIVITY, CREATIVE FINANCING, AND INBOUND INTEREST OUTWEIGHING DEBT MARKETS AND REGULATORY SCRUTINY THOUGH EVERY day throws up a new hurdle − from geopolitical conflict and surging gas and oil prices to uncer- tainty around tariffs − Troy Ungerman isn't interested in overhyperbolizing the negative. Despite ripple effects through M&A markets from geopolitical forces, in his view, significant crisis presents significant opportunity. "There's a lot of activity; deals take longer, but they're still happening − and they're still excellent deals," stresses Ungerman, partner at Norton Rose Fulbright LLP and Canadian cohead of mergers and acquisi- tions. "We have sophisticated players in our marketplace that are keen to do a deal if it's right." Resource depth, 'onsale' valuation draw global interest Midmarket transactions are showing resil- iency, with current conditions prompting a harder look at Canada's economic inde- pendence and how best to bolster domestic businesses through targeted investment and strategic acquisitions. Ungerman points to investor interest in priority sectors such as defence, AI and digital infrastructure, critical minerals, and energy transition as a powerful counterweight to volatility. "The oil and gas industry remains very active in certain segments," Ungerman notes. For those able to navigate issues like tariffs, opportunities remain robust: there are major deals across the country that align with government policy objectives and the drive for greater autonomy. Troy Ungerman Partner, Canadian co-head of mergers and acquisitions