Brent Kraus and Kris Hanc comment in a feature story in Lexpert's Special Edition on Finance and M&A on how deal-making is continuing its extraordinary momentum in Canada. Both Brent and Kris are once again recognized as Lexpert-ranked lawyers in Corporate Finance and M&A for 2022.
"Also in the resurgence category has been the 'dramatic increase in commodity prices' in the energy sector in 2021, says Kraus. This increase resulted in some consolidation and higher confidence in deals. It has also produced more cash, and while some companies will focus on debt reduction, others on share-buybacks, this will inevitably lead to more money in the system for M&A opportunities, he says. In the last four to five years, private equity has pulled back from oil and gas, but with optimism in the industry returning, the time is ripe for a redirection of that capital, says Kraus."
"In 2021, the M&A market was also bolstered with 'the rise of the Canadian champion,' as outbound M&A saw a resurgence after a slow 2020, says Hanc. One example was Canadian Pacific Railway Ltd., which acquired Kansas City Southern in a deal worth US$31 billion . . . 'For many years, there was talk about the hollowing out of corporate Canada,' says Hanc. 'I think we are starting to see some real Canadian champions. And we expect that to continue in 2022 as Canadian companies look to invest abroad.'"
"In 2022, ESG will continue to grow in importance in M&A deal activity, says Kraus. 'The ESG aspects of M&A are now an integral component of selling a deal, both to investors and the market,' he says. 'More and more companies, I would say, are looking at M&A as an opportunity to project and implement corporate social responsibility, be that an opportunity to address board diversity in their own company or, in some industries, to address emissions management and sequestration.'"
"Hanc also expects a strong showing in basic materials, driven by continued investment in 'green' metals such as copper, lithium and other battery metals."
The full article can be found on Lexpert's website.