Canadian Lawyer

LEGAL REPORT/M&A the skepticism in his voice. "Everybody is still being cautious — there is the idea of optimism although I'm not sure there are real indicators to suggest there's going to be an uptick," says Seidel, the firm's Edmonton managing partner. "We had a remarkably good year in a really uncertain economy but there was a lot of exploratory work, a lot of relationship work, and effort in making things happen, or in contributing 44 ntitled-1 1 F e b r uary 2014 www.CANADIAN to factors that we hope will make things happen in the future. There is a lot of diligence and relationship work for when the economy does pick up or when liquidity increases." While his focus is primarily helping Americans do inbound deals to Canada, Adkins agrees last year was tough. "[2013] was not stellar, it was pretty sluggish — that's just M&A globally and Canada has been the L a w ye r m a g . c o m same," he says. "There are a couple of things that make [2014] a bit more promising — one is the Canadian dollar is weakening. That makes Canadian targets look a bit more affordable. The other thing is the U.S. has stabilized and we're not in the situation we were in a few years ago, so I think the American buyers are in more of a position to make acquisitions but I don't expect any huge surge in the coming year." The real story, says Adkins, has been outbound activity. "We've especially seen the Canadian pension funds and other Canadian companies buying real estate in the U.S. and internationally. The outbound M&A volume has definitely been higher than the inbound into Canada." The pension funds have significant capital and sophisticated investors. "They turn up in all kinds of investments all over the world. There are limited assets for the pension funds to buy in Canada and so they have been much more active internationally." M&A lawyers know there is money out there for deals but companies are still hanging on just in case. Many have cash on hand to make deals — and the ability to borrow is still good — but there remains a lack of appetite by boards to make a move, as board members remain cautious about acquisition strategies. No one sector or industry has been able to move the dial very far. From the perspective of foreign investors, there's also still a question mark on how the federal government here in Canada views state-owned enterprise investment. "The government doesn't want SOEs buying majority interest in the oilsands but I think what we will see is SOEs making minority investments. The flip side is that for the vast majority of all other deals — Americans buying Canadian companies — most deals get done. It's business as usual for deals not in that sensitive industry [oilsands] and not SOE," says Adkins. When it comes to China and SOEs, it's a perception issue that needs to be addressed, says William Gilliland, a partner with Dentons LLP in Calgary. Ottawa's confused message after the CNOOCNexen acquisition — that Canada appears to want investment from China but on our terms — has sent ripples through the investment community. "Our sense is there is a view outside of Canada that state- 14-01-15 8:40 AM

• Cover