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Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
Global | Publication | February 2021
The global effects of the pandemic have caused inevitable market pressures that will require industries to look towards reshaping the manner in which they carry on business, organically or through M&A. While 2020 may not have been the year of M&A mega deals, the pandemic that consumed 2020 has brought on a shift in both M&A activity in Canada and the structure of deals we anticipate to see in 2021.
Despite the unsurprising drop in M&A activity in the first half of 2020, the third quarter experienced a surge in deals. Several factors influenced this deal momentum, which we anticipate will persist and carry well into 2021:
Despite the fact that certain industries, such as mining and commodities, which may have dominated the Canadian M&A market in 2019, may be more susceptible to “supply shocks” during a global financial or economic crisis, we expect to see an uptick in deal volume in other industries:
Naturally, buyers have become increasingly concerned about the businesses of prospective acquisitions during these rather uncertain times. That said, we can expect that alternatives to payment arrangements and due diligence proceeds will likely permeate the traditional M&A structure in order to allow buyers to facilitate acquiring a business in 2021:
Lawyers are encouraged to monitor M&A activity as the pandemic has altered the landscape for M&A activity and structure that will carry over into, and well beyond, 2021. Indeed, despite the uncertainties experienced in 2020, we expect to see an uptick in M&A activity and creative structures to bridge the gap between parties, especially in those industries where the pandemic has presented opportunities for buyers or sellers alike.
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Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
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