Distressed M&A Opportunities Are Emerging

Canadian distressed M&A activity seems poised to rise, as low commodity prices and tight capital markets spur a re-examination of business models and balance sheets built for better times. Investment capital is readying itself for upcoming distressed opportunities, and restructuring laws are conducive to facilitating these deals.

Some investors and strategic buyers have shied away from distressed opportunities in the past because they see them as being especially risky, complicated and contentious. While there is some truth to this, savvy investors know that this field also comes with unique benefits and potentially outsized returns.

What is Distressed M&A?

Distressed M&A typically refers to deals completed when the target company is facing insolvency or is already insolvent. The Companies' Creditors Arrangement Act (CCAA) is a popular proceeding for larger insolvent companies, while receiverships are more common for smaller companies. Solvent companies have