How do I build a buyer list that includes strategic acquirers?

Here, a strategic acquirer means a business that would buy because the target fits its own operations, rather than purely as an investment. BDC notes that potential acquirers could include competitors interested in expanding their product line or market share, or other companies in your value chain. A useful buyer list names those companies, then sorts them, as in selling to a strategic vs a financial buyer, by what each would need to see, what approvals each might trigger, and how much of your information you are willing to share before you know them better.

Where strategic names come from

Start from the relationships the business already has. The Competition Act’s definition of a merger refers to the business of a competitor, supplier, customer or other person (s.91), which makes a handy prompt: list competitors, suppliers, customers and nearby businesses that serve the same customers. BDC says buyers can be found through a business broker for smaller businesses or an investment banker for larger ones. Either can approach names you would rather not contact yourself.

Confidentiality before contact

BDC warns that, depending on a listing site’s confidentiality procedures, word could get out to employees, customers or suppliers that you are selling. Ask the same question before you contact a competitor, supplier or customer directly: what will they know, who will they tell, and what has to be signed first? Customer or employee records are personal information, and PIPEDA s.7.2(1) allows parties to a prospective business transaction to use and disclose it without the individual’s knowledge or consent if an agreement binds the recipient and the information is necessary, in addition to the routes in s.7(2) and (3) and subject to s.7.2(4).

Competition Act questions for competitors

A sale to a competitor can raise Competition Act issues. Under s.92, subject to ss.94 and 95, the Competition Tribunal may, on the Commissioner’s application, act against a merger or proposed merger that prevents or lessens, or is likely to prevent or lessen, competition substantially. Separately, Part IX requires the parties to a notifiable proposed transaction to notify the Commissioner before completing it (s.114), and s.123(1) sets a 30-day waiting period that can run longer if more information is required, or end early under s.123(2). See also what regulatory approvals a sale can need. Whether a given buyer triggers this is a question for your lawyer, using the Competition Bureau’s guidance on notifiable transactions.

Foreign strategic buyers

If a name on the list is a non-Canadian, the Investment Canada Act may apply. Section 11 makes an investment to acquire control of a Canadian business subject to notification unless it is reviewable under s.14, and s.12 allows notice at any time before implementation or within thirty days after. Subject to the exceptions in s.16(2), a reviewable investment cannot be implemented unless it has been reviewed and the Minister is satisfied, or deemed satisfied, that it is likely to be of net benefit to Canada (s.16(1)). ISED publishes the current review amounts, which depend on the type of investor.