The value of global mergers and acquisitions during the first six months of 2021 reached $ 2.8 trillion, according to the US-British firm Refinitiv. (Photo: Gabrielle Henderson)
BUSINESS LAW. After a marked slowdown in the first two months of the pandemic, the mergers and acquisitions (M&A) market has exploded to the point of breaking records in 2021. This situation puts pressure on the resources of law firms.
Like everyone else in 2020, the pandemic has taken entrepreneurs by surprise. “We felt hesitation for a quarter and several transaction projects were suspended,” says Me Pascale Dionne, associate attorney at Borden Ladner Gervais (BLG). No one imagined that M&A activity would increase so strongly. “
The value of global mergers and acquisitions during the first six months of 2021 reached $ 2.8 trillion, according to the US-British firm Refinitiv. A record since he began collecting these statistics in 1980.
In Canada, the recovery that began in the summer of 2020 continued this year. As of May 31, Canadian companies had been involved in 729 transactions worth a total of $ 158 billion ($ M), according to Financial Post Data (FP Data). Adding mergers and acquisitions under $ 5 million and those involving a foreign buyer and seller, unknown to FP Data, the number of deals rises to more than 1,985 in mid-June, Refinitiv calculates.
We are snatching resources
“Such activity puts some pressure on work teams, which must redouble their agility to meet demand,” admits Me Dionne. At BLG, investments in technology over the past few years have helped us maintain smooth and efficient communication and document transmission during this time. “
He adds that this pressure is not the exclusive domain of law firms. “All market players experience it, whether they are clients, accounting firms, banks or investment funds. So we are all understanding and collaborative, ”says the lawyer.
In times of labor shortages, this overheating of the M&A industry also creates strong competition for hiring. Clearly, we are destroying business lawyers. “Resources are the nerve of war,” acknowledges Jean-Pierre Chamberland, associate attorney at Fasken. Over the past year, the firm has hired three business law partners, in addition to several young lawyers.
In addition, the shift to telecommuting has expanded the hunting ground for closets. “New York firms, for example, offer Quebec attorneys to work for them while they remain in Quebec,” illustrates Me Chamberland. They offer New York salaries, often almost double Quebec salaries, as well as offering a wealth of experience to add to your CV. It is fierce competition. “
Others decide to join. On August 10, Langlois Avocats announced a partnership with the transactional law firm of Laval Séguin Racine Avocats, which specializes in mergers and acquisitions and is staffed by some twenty lawyers.
If the activity is present in most sectors, the technology sector stands out. According to Me Chamberland, several companies that have recently gone public, such as Lightspeed or Nuvei, are now looking to make acquisitions. Nuvei also purchased Smart2Pay two months after its listing on the Toronto Stock Exchange.
The health, cannabis and environmental infrastructure sectors are also very active, as evidenced by WSP’s acquisition of American Golder, which created the world’s largest environmental consultancy. The takeover bids of Kansas City Southern by CP and CN (over $ 30 billion each) and the purchase of Shaw Communications by Rogers Communications ($ 25 billion) were notable in recent months.
How to explain such a frenzy? I Jean-Didier Bussières, associate attorney at Cain Lamarre, indicates that several elements make the context favorable to mergers and acquisitions. “Businesses have adapted to the pandemic and are optimistic about economic recovery in Canada, the United States and elsewhere,” he says.
His colleague from the same cabinet, I Marc-Alexandre Poirier, adds that the financial environment remains very good. “There is a lot of capital available in the market and very low interest rates make debt cheap, which whets the appetite of buyers,” he says.
It remains to be seen how long this will last. “We hope that the pace will continue in 2021 and early 2022, but trying to see further in the current context is still quite dangerous, stresses Me Bussières. It is better to be prepared for all eventualities. “