Representations & Warranties – No One-Size-Fits All


Private M&A purchase and sale agreements in Canada follow a very familiar pattern and typically include what can be described as the ‘usual representations and warranties’. In sophisticated purchase agreements the usual representations and warranties are comprehensive and cover everything from corporate, employment and environmental matters to financial, tax and intellectual property matters.  While the usual representations and warranties cast a wide net, they are by no means a one-size-fits all solution for addressing risk. Each transaction is unique and requires that clients, their financial advisors and their legal advisors turn their mind to drafting representations and warranties that address the specific risks of the transaction. Continue reading

Earn-Outs & Post-Closing Integration


Earn-outs, a contingent purchase price adjustment mechanism, are a common feature of private M&A transactions, especially where there is some uncertainty around valuation and future performance.  For example, a motivated buyer enticed by future growth projections may be prepared to pay a higher multiple of earnings for a business than other prospective purchasers but, in exchange for doing so, may require that a portion of the purchase price be contingent on the business achieving those growth projections. If the seller believes the proposed growth targets are attainable and wishes to extract the higher pricing, it may be agreeable to an earn-out.

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Due Diligence & Legal Audit


For many private business owners with strong annual earnings the ultimate retirement plan or exit strategy is to sell their business to a strategic buyer or private equity firm for a high multiple of earnings.  It is not unusual for such business owners to think that once they achieve attractive EBITDA numbers for three to five years running, they are ready to go to market and achieve premium pricing.

In reality, good financial metrics are table stakes in the M&A game. Sophisticated buyers conduct comprehensive due diligence on all value drivers to assess the merit of a transaction and determine price. Some of those value drivers include commercial and operational synergies, growth potential, intellectual property, human capital, risk management and legal profile.

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