Various components of the firm's Private Equity & Venture Capital practice are described below.
Buy-Outs
Stikeman Elliott has acted on a number of buy-outs for private equity clients, which are often a complex series of transactions. We are able to leverage our considerable experience in private M&A transactions, tax, banking and management arrangements.
WHEN ACTING FOR BUYERS
- Assisting in the development of the appropriate strategy for auction participation;
- Structuring and executing the complex financing and debt structures associated with such transactions;
- Documenting arrangements between management, shareholders and investors;
- Advising with respect to compensation issues;
- Performing due diligence, and
- Advising on any resulting tax, regulatory, financing, securities and accounting issues.
WHEN ACTING FOR SELLERS
- Advising on establishing the appropriate process;
- Establishing data rooms and due diligence;
- Assisting in arranging appropriate insurance, and
- Negotiating transaction documents.
Establishing a Fund
Making Private Equity Investments
Stikeman Elliott has a broad range of experience in acting for investors making investments in private companies. The breadth of our experience gives us a particular insight into the myriad of potential arrangements that can be entered into among investors, and between investors and the investee company, pertaining to corporate governance, fundamental rights, structure of the investment and exit rights. Specific advice includes:
- Structuring transactions, including angel, seed, early and late stage, bridge, convertible, debt, follow-on and mezzanine and subordinated debt investments, private placements into public companies, PIPEs, leveraged and management buy-out financings, and rollup acquisition financings as well as restructurings and reorganizations;
- Identifying co-investment opportunities or sources of capital;
- Negotiating terms and conditions of an investment;
- Performing due diligence;
- Negotiating transaction documentation, including shareholder, investor rights, subscription and registration rights agreements;
- Negotiating and documenting inter-creditor arrangements;
- Identifying and implementing exit strategies, including mergers and acquisitions, trade sales, IPOs (including via income trusts), and public market sales;
- Addressing tax issues, including tax-effective investments in Canadian companies by US investors, such as exchangeable share structures, and
- Providing ongoing advice concerning innovative investment structures.
Establishing a Fund
Stikeman Elliott has developed a strong reputation for assisting individuals in establishing a fund as we understand the complexities of the legal and business issues facing investors as well as the market at any particular point in time. We also have contacts at a number of financial institutions that regularly invest in funds, and at other funds of funds.
An essential element of the establishment of a fund is the development of a governance and compensation model for the fund manager. Having acted for a number of these funds, we are well versed in the many options available and the suitability of each in particular circumstances.
Another crucial component in fund formation is tax structuring to ensure appropriate tax treatment for the fund and its investors. Stikeman Elliott has a well-known and highly regarded tax group to assist with these structuring issues.
In addition, our international network of offices makes us particularly well suited to handle international fund formation and in particular, the investment by non-resident investors in Canadian funds, cross-border investment and the sourcing of investment opportunities.
We regularly act in connection with:
- Fund creation and maintenance, including US funds investing into Canada and Canadian funds investing into the US;
- Labour-sponsored investment funds;
- Private and public limited partnerships;
- Closed and open-ended investment trusts and corporations, and
- Fund management, placement agency and advisory agreements.
Investee Companies
Given our expertise in acting for private equity funds, we routinely act for both investee companies and management who are looking for private equity partners. In addition to introducing our clients to a broad range of potential private equity partners, we have extensive experience in structuring arrangements with private equity partners, including the negotiation of appropriate compensation and equity participation for management, and in structuring arrangements between members of the management group.
Liquidity Events
An essential element in all private equity investments is the occurrence of a liquidity event. Stikeman Elliott has a strong reputation in the public markets environment in both conventional and income trust initial public offerings as well as M&A transactions, both domestic and cross-border.
Shareholder Disputes
Should a dispute arise between the private equity investor and management of the portfolio company or if the investment fails, we are able to assist in a number of ways including: enforcing special contractual remedies; invoking statutory oppression, appraisal, derivative, investigative and compulsory winding-up remedies; and, seeking resolution through mediation or arbitration.
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