Private Equity M&A: Increasing Demand for Exchangeable Share Structures

Exchangeable shares have been gaining popularity in Canadian M&A deals, especially in cases where private equity firms are involved. These shares are a type of security that can be exchanged for shares of another company, typically the parent company of the issuer. This allows investors to participate in the success of a specific project or business, while maintaining a degree of separation from the overall corporate structure.

The use of exchangeable shares in M&A transactions offers several advantages for both buyers and sellers. For buyers, it can provide a way to structure a deal that aligns the interests of all parties involved. By tying the performance of the exchangeable shares to the success of a specific project, investors are incentivized to work towards its success. This can help mitigate some of the risks associated with traditional M&A transactions.

Sellers also stand to benefit from the use of exchangeable shares. By offering this type of security as part of the deal, sellers can attract potential buyers who may be hesitant to take on full ownership of a company. Exchangeable shares provide a level of flexibility that can make the deal more attractive to investors, while still allowing sellers to retain a stake in the business.

Overall, the use of exchangeable shares in Canadian M&A transactions reflects a growing trend towards innovative deal structures that can better align the interests of all parties involved. As the landscape of M&A continues to evolve, we can expect to see more creative solutions like exchangeable shares being used to facilitate successful deals.