Insight

What the Seller-Friendly Market Means for Private Equity

JP Bogden and Kurt Sarno of 2019 Canadian "Law Firm of the Year" award-winner Blakes discuss trends in the private equity sector.

Blakes 2019 "Law Firm of the Year" Interview
Best Lawyers

Best Lawyers

February 15, 2019 09:30 AM

Kurt Sarno and John-Paul (JP) Bogden are partners at Blakes, the 2019 “Law Firm of the Year” recipient for Leveraged Buyouts and Private Equity Law in Canada. Speaking with Best Lawyers CEO Phillip Greer, Sarno and Bogden discuss the changes coming to their field and technology’s impact on mergers and acquisitions more broadly.

What inspired you to focus your expertise in the leverage buy-outs and private equity sector?

Kurt Sarno: I started focusing on a mergers and acquisitions practice and quickly realized that in Canada, the volume of private M&A outpaces public M&A. And in that space, noticing the import of U.S. trends to Canada, private equity was a sector of the private M&A market that I thought would have a long future. So, I tried to find roles in private equity transactions as a junior lawyer, and then hone my specialty throughout my career here at Blakes and practicing, for a short stint, down in the United States.

And JP, what brought you into this sector?

JP Bogden: I did a private equity buyout deal quite early in my career and was captivated by the use of leverage to generate returns for the fund and management alike. I also realized that working with private equity professionals is a bit of a treat from a service provider perspective: They're knowledgeable, sophisticated individuals who do deals for a living.

Do you see any trends or changes continuing to happen in this field over the coming years?

Sarno: I think a trend that I can say is continuing is the existence of a very friendly sellers’ market in private equity transactions. The abundance of capital on the buy or investment side and the shallow pool of assets available for that capital to be deployed to has made it very easy for sellers to get deals done at very high multiples. I think in most cases, sellers are tending to engage sophisticated financial advisors to run processes, which has resulted in exits without very much post-closing sale- side risk, including fewer post-closing indemnities, which had always been a hallmark of private M&A. Then on top of that, you layer on the recent development and usage of rep and warranty insurance in Canada. It's really tying a very seller-friendly package in a pretty bow.

Bogden: Part and parcel with the seller-friendly market, we are seeing an importation of what we would have typically considered to be U.S.-style deal terms into purely domestic transactions. For example, we are seeing no-seller indemnity policies, where the seller is not paying any portion of the retention amount for the rep and warranty insurance policy, and also seeing time limits imposed on fundamental representations which historically used to run forever.

Have there been any important policy changes, locally or globally, that have impacted your firm's work in this field?

Sarno: I wouldn't say policy. I think I can categorize it as strategic changes from large institutional investors: The pension funds, endowment funds, the large pools of capital around the world have, I think, allocated a greater portion of their assets to private equity, which has produced an increased volume of supply of capital available for deployment. This ties into the prior point we discussed about it contributing to a very seller-friendly market.

That, I think, coupled with a competitive advantage for private equity as compared to public markets that continue to be heavily regulated, if not increasingly more regulated, has made it a very attractive space into which private equity investors are putting their capital.

Bogden: The point I was going to make is a more granular one. A relatively recent change to Canadian income tax laws have made a so-called hybrid structure (where both shares and assets are sold) less appealing. We're seeing a whole lot less of those deals, which from a deal execution perspective, is welcome news because they're complicated deals.

A trend that I can say is continuing is the existence of a very friendly sellers’ market in private equity transactions.

In what ways have changes in technology impacted your firm's work in private equity?

Bogden: Technology is getting better and better at helping M&A deals get done. There's a software package we use called Closing Folders, which I would have killed for as a junior lawyer, that lets us assemble signatures and closing sets without any wasted steps at all. It's a collaborative tool that can be shared by deal counsel from all sides. That's been a great help in getting things done more efficiently.

Sarno: Other technology solutions that are used in transactions as a whole, not only in mergers and acquisitions in general but also in private equity buyout and investment transactions, include diligence related software, software that allows the review of large volumes of documents for specific provisions that are relevant to the structure of the transaction and online platforms that allow sellers to make available their records for review, which facilitate and speed up due diligence.

[RELATED: Voting for the 2020 Edition of The Best Lawyers in America begins February 13]

Is there anything else you want to share about your practice area or other groups that your firm is particularly proud of?

Bogden: There's one thing that I always mention when asked about what differentiates us from our peer firms, and that's the strength of each of our offices in our major Canadian markets. Our Vancouver, Calgary, Toronto, and Montreal offices are all very strong. While we, of course, don't have a franchise on excellence and face stiff competition from our peer firms on a daily basis, it’s a terrific advantage to be able to call up any office in our Canadian network with confidence, knowing that we're able to provide our clients with the best possible expertise that each city has to offer.

Related Articles

The Buyout Brigade


by Best Lawyers

Neill May, John Connon, and David Matlow discuss what’s ahead for private equity—and why dealmakers of all stripes have more leverage than ever.

An Interview With Goodmans

The 2021 Best Lawyers in Canada


by Best Lawyers

Featuring the top legal talent in Canada.

Best Lawyers Canada 2021 Homepage Image

The 2021 "Law Firm of the Year" Awards in Canada


by Best Lawyers

We are excited to announce the recipients of the 2021 "Law Firm of the Year" awards in Canada.

2021 Law Firm of the Year Awards in Canada

Leading the Evolution in Workplace Law


by Best Lawyers

Colin G.M. Gibson discusses workplace safety, issues such as raising the minimum wage, and job-protected leaves. 

An Interview With Harris & Company

Why Cariola Díez Pérez-Cotapos Developed Its Own Legal Tech


by Best Lawyers

Juan Pablo Matus of Cariola Díez Pérez-Cotapos, 2019 "Law Firm of the Year" award for Corporate and M&A Law in Chile, discusses his firm's joint venture with Cognitiva in creating Lexnova, a legal AI system.

Cariola Díez Pérez-Cotapos Interview

Davies Points to “Groupthink” as Contributor to Industry Stagnation


by Best Lawyers

The 2019 Canaidan "Law Firm of the Year" honoree for Competitions/Antitrust Law shares the keys to their success.

Davies "Law Firm of the Year" Q&A

Gowling WLG Attorneys Discuss Aboriginal Law in Canada


by Best Lawyers

Gowling WLG won the 2019 "Law Firm of the Year" award for Aboriginal Law in Canada.

Gowling WLG "Law Firm of the Year" Q&A

Fasken Attorneys on Their 2019 "Law Firm of the Year" Award Win


by Best Lawyers

Lawyers from the Canadian firm discus their employment law practice and the changes coming to the Canadain legal market.

Fasken Law Firm of the Year Q&A

Q&A with Pablo Perezalonso Eguía of Ritch Mueller


by Best Lawyers

An interview with Pablo Perezalonso Eguía of 2018 Mexican "Law Firm of the Year" Ritch Mueller.

Pablo Perezalonso Eguía – Ritch Mueller

IN PARTNERSHIP

Breaking Down Criminal Conviction in Canada


by Mass Tsang

Statistics Canada’s annual breakdown of adult criminal court data provides an eye-opening review of how the country’s court system resolves its hundreds of thousands of cases annually.

Canada's Criminal Court Patterns Are Changing

Unveiling the 2025 Best Lawyers Awards Canada: Celebrating Legal Excellence


by Jennifer Verta

Presenting the 19th edition of The Best Lawyers in Canada and the 4th edition of Best Lawyers: Ones to Watch in Canada.

Digital map of Canadathis on illuminated by numerous bright lights

IN PARTNERSHIP

Understanding Your Rights: What to Do If You’re Arrested


by Richard Posner

Toronto-based criminal defense lawyer Richard Posner offers his expert opinion on actions to take during an arrest to avoid further legal complications.

Individual with hands on head is detained by police

IN PARTNERSHIP

From Allegations to Action: Navigating Legal Options for Sexual Abuse Survivors


by Wagners Law Firm

All too often, instances of sexual abuse occur within an institutional environment. Read more to find out what to do in cases of sexual and institutional abuse.

Animated woman sits with her eyes closed

IN PARTNERSHIP

How Long Can You Stay on Long-Term Disability (LTD)?


by Yegendorf Rashid Long-Term Disability Lawyers

Canadian-based firm Yegendorf Rashid break down the intricacies of long-term disability benefits and how to navigate the complex legality that comes with it.

Silhouettes of different people with disabilities

IN PARTNERSHIP

How to Protect Your Inheritance from Divorce in Ontario


by Usman Sadiq

One lawyer in Canada explains that, although division of assets does not always have to be evenly split, it should be fair, and inheritance is no exception.

Small grey house with red roof under large red umbrella on blue background

IN PARTNERSHIP

Sexual Misconduct Investigations at Work


by Carley Reynolds

Lawyer Carley Reynolds explains how to navigate sexual misconduct allegations at work and offers advice and guidance for those who have been falsely accused.

Woman in yellow shirt talking with man in blue shirt at desk

Trending Articles

2025 Best Lawyers Awards Announced: Honoring Outstanding Legal Professionals Across the U.S.


by Jennifer Verta

Introducing the 31st edition of The Best Lawyers in America and the fifth edition of Best Lawyers: Ones to Watch in America.

Digital map of the United States illuminated by numerous bright lights

Unveiling the 2025 Best Lawyers Awards Canada: Celebrating Legal Excellence


by Jennifer Verta

Presenting the 19th edition of The Best Lawyers in Canada and the 4th edition of Best Lawyers: Ones to Watch in Canada.

Digital map of Canadathis on illuminated by numerous bright lights

Legal Distinction on Display: 15th Edition of The Best Lawyers in France™


by Best Lawyers

The industry’s best lawyers and firms working in France are revealed in the newly released, comprehensive the 15th Edition of The Best Lawyers in France™.

French flag in front of country's outline

Announcing the 13th Edition of Best Lawyers Rankings in the United Kingdom


by Best Lawyers

Best Lawyers is proud to announce the newest edition of legal rankings in the United Kingdom, marking the 13th consecutive edition of awards in the country.

British flag in front of country's outline

Announcing the 16th Edition of the Best Lawyers in Germany Rankings


by Best Lawyers

Best Lawyers announces the 16th edition of The Best Lawyers in Germany™, featuring a unique set of rankings that highlights Germany's top legal talent.

German flag in front of country's outline

Prop 36 California 2024: California’s Path to Stricter Sentencing and Criminal Justice Reform


by Jennifer Verta

Explore how Prop 36 could shape California's sentencing laws and justice reform.

Illustrated Hands Breaking Chains Against a Bright Red Background

Celebrating Excellence in Law: 11th Edition of Best Lawyers in Italy™


by Best Lawyers

Best Lawyers announces the 11th edition of The Best Lawyers in Italy™, which features an elite list of awards showcasing Italy's current legal talent.

Italian flag in front of country's outline

Combating Nuclear Verdicts: Empirically Supported Strategies to Deflate the Effects of Anchoring Bias


by Sloan L. Abernathy

Sometimes a verdict can be the difference between amicability and nuclear level developments. But what is anchoring bias and how can strategy combat this?

Lawyer speaking in courtroom with crowd and judge in the foreground

Things to Do Before a Car Accident Happens to You


by Ellie Shaffer

In a car accident, certain things are beyond the point of no return, while some are well within an individual's control. Here's how to stay legally prepared.

Car dashcam recording street ahead

The Push and Pitfalls of New York’s Attempt to Expand Wrongful Death Recovery


by Elizabeth M. Midgley and V. Christopher Potenza

The New York State Legislature recently went about updating certain wrongful death provisions and how they can be carried out in the future. Here's the latest.

Red tape blocking off a section of street

Find the Best Lawyers for Your Needs


by Jennifer Verta

Discover how Best Lawyers simplifies the attorney search process.

A focused woman with dark hair wearing a green top and beige blazer, working on a tablet in a dimly

Tampa Appeals Court ‘Sends Clear Message,” Ensuring School Tax Referendum Stays on Ballot


by Gregory Sirico

Hillsborough County's tax referendum is back on the 2024 ballot, promising $177 million for schools and empowering residents to decide the future of education.

Graduation cap in air surrounded by pencils and money

Key Developments and Trends in U.S. Commercial Litigation


by Justin Smulison

Whether it's multibillion-dollar water cleanliness verdicts or college athletes vying for the right to compensation, the state of litigation remains strong.

Basketball sits in front of stacks of money

Is Premises Liability the Same as Negligence?


by Jeremy Wilson and Taylor Rodney Marks

In today's age, we are always on the move, often inhabiting spaces we don't own. But what happens when someone else's property injures you or someone you know?

A pair of silhouetted legs falling down a hole with yellow background

Woman on a Mission


by Rebecca Blackwell

Baker Botts partner and intellectual property chair Christa Brown-Sanford discusses how she juggles work, personal life, being a mentor and leadership duties.

Woman in green dress crossing her arms and posing for headshot

Best Lawyers Celebrates Women in the Law: Ninth Edition


by Alliccia Odeyemi

Released in both print and digital form, Best Lawyers Ninth Edition of Women in the Law features stories of inspiring leadership and timely legal issues.

Lawyer in green dress stands with hands on table and cityscape in background