U.S. and Canadian Cross-Border Transactions: U.S. Governing Law and Unique Deal Terms

Ceiledh Hemmati and Kelly Hammel write in Deal Points: The Mergers and Acquisitions Newsletter on trends in U.S. and Canadian cross-border transactions, highlighting U.S. governing law and unique deal terms.

This article discusses the challenges faced by Canadian counsel in cross-border mergers and acquisitions involving U.S. purchasers and Canadian businesses. It highlights key deal terms that require negotiation, including governing law, alternative dispute resolution mechanisms, transactional insurance, severance entitlements, sandbagging provisions, consequential damages, the use of a paying agent, earn-outs, and indemnification terms. These areas often require careful negotiation and understanding of the differences between Canadian and U.S. practices.

Ceiledh and Kelly say that "it is imperative to have competent Canadian legal counsel providing input and advice on both sides of a cross-border deal in order to facilitate a more efficient closing for both parties involved. An experienced Canadian counsel to such a deal can help to prevent unnecessary issues to arise between counsels and their respective clients by advising on differences in commonly accepted provisions, practices and views under Canadian and U.S. law in cross-border M&A transactions."