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CCCA61_027-031.qxd:CCCA_V1No1_DriversSeat-FIN.qxd 2/8/08 11:47 AM Page 28 Feature O ne of the most obvious effects of the squeeze deal cannot be completed. on credit is the kind of M & A deals that will Corporate counsel will also want to track closely the extent be made. “The big deals are not happening,” says to which a target company is exposed to the asset-backed com- mercial paper (ABCP) market, and whether or not it has been Michael Gans, a partner with Blake, Cassels & Graydon LLP’s able to find other kinds of credit instead. NewYork office. “In Canada, we were seeing big private equi- To Patricia Olasker,a corporate finance partner with DaviesWard ty deals like Bell Canada and Telus, but [since the summer] the Phillips &Vineberg LLP in Toronto, it all adds up to more oppor- activity is all in the mid-market deals that range from around tunities, but also more work for law departments.“With the change $500 million to $2 billion, which is the core of the Canadian in the availablity of credit,the private equity guys are less competi- public to private equity market.” tive on price and are having to put more equity into their deals,” Gans says the message to Canadian corporate counsel, to the she says.“Plus, lenders are now imposing a whole range of condi- extent that their companies are thnking of selling all or parts of tions — like the reverse break fees — on private equity borrowers. their business, is that the deal flow continues, but at a slightly That means private equity buyers are making highly conditional slower pace. He also says people are more focused on deal terms offers, which makes them less competitive than strategic buyers.” now, particularly items such as reverse break fees to be paid if the While stressing that the current drying up of liquidity is most “ Private equity buyers are making highly conditional offers, which makes them less competitive than strategic buyers. Patricia Olasker Corporate finance partner ” Davies Ward Phillips & Vineberg, Toronto ALENA GEDEONOVA 28 CCCA Canadian Corporate Counsel Association SPRING 2008