A wide range of private equity transactions is common in Canada, including going-private transactions, private investments in public companies and private company buyouts. In order to effect a direct acquisition of a Canadian target company, a private equity sponsor will almost always incorporate a Canadian acquisition vehicle, which will then acquire the target company by way of an acquisition of the securities or assets. In situations involving a large number of selling shareholders, either an amalgamation (similar to a US merger) or a court-approved plan of arrangement may be used.
The acquisition method (securities, assets, amalgamation or plan of arrangement) is dependent on various factors, including tax and legacy liability considerations, in addition to the parties’ ability to leverage their positions in the negotiations.
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