This article is the first part of our private M&A deal study series which comprises six articles where we highlight guidance provided by the American Bar Association's 2025 private M&A deal point study and dig into some key aspects of a private M&A deal in Canada.
Negotiating private M&A deals
‘Pressure' leads the list of songs displayed on the Spotify profile for alternative rock band ‘On Better Terms'. That song features the emotional melodies and therapeutic lyrics the band is known for. Negotiating private M&A deals can elicit many emotions and can be especially daunting for businesspeople who have never before sold or purchased a business. But armed with the right knowledge and professional support, a good rhythm can be found in the M&A transaction process.
American Bar Association's 2025 study
The American Bar Association has recently released its 2025 study which analyzes 83 acquisition agreements signed in 2020, 2021 and 2022 (being years associated with the Covid-19 pandemic) for the sale and purchase of private Canadian entities. The study (the latest since 2018) is widely recognized as a leading resource in shedding light on the question ‘what is market?' with respect to deal terms in private M&A transactions governed by Canadian law.
In this article and over the next five articles, we are going to highlight guidance provided by the 2025 study and dig into the following aspects of a private M&A deal:
- The M&A transaction – preliminary steps.
- The M&A transaction – negotiating transaction documents.
- Interim period and post closing covenants.
- Representations and warranties.
- Indemnities and limitations on liability.
An effective M&A strategy
Effective strategies to negotiating M&A deals involve a coordinated and multi-faceted approach, where tax and accounting advisors and legal advisors are engaged early and work in unison. Tax and accounting advisors design, complete and justify valuations. These advisors also identify tax and other financial risks to mitigate through the use of contractual statements and mechanisms in transaction documents. Legal advisors provide insight on contractual arrangements designed to implement risk mitigation, and the approaches taken are informed by tax and accounting advice.
Study limitations
There are some limitations to the value of the 2025 study's findings. The study is limited to publicly disclosed deals in which a public company acquires or sells a private target entity. A public company likely has greater leverage in a transaction given that transaction finance is unlikely an issue and it can generally spend more on transaction advisors. Also, the 2025 study sample period covers Covid-19 pandemic years which years were characterized by low interest rates, a seller's market with higher purchase prices, and active private equity players. These factors will have had an impact on the terms agreed in the 2025 study's sample transactions and therefore also on the statistics produced by the study.
What is the ‘market' position on a given negotiated point is likely unhelpful if one party has greater leverage as compared to the counterparty. Leverage gained, for example, due to the relative size and resources of the transacting parties or timing constraints forcing a quick deal to be done, could lead to significant scope for divergence from the ‘market standard' in M&A deals.
About Mackrell International – Canada - Lindsay Kenney LLP is a full service business law firm with offices in Vancouver and Langley, BC and a member of Mackrell International. Mackrell International – Canada is comprised of four independent law firms in Alberta, British Columbia, Ontario and Quebec. Each firm is regionally based and well-connected in our communities, an advantage shared with our clients. With close relations amongst our Canadian member firms, we are committed to working with clients who have legal needs in multiple jurisdictions within Canada.
This article is intended to be an overview and is for informational purposes only.