Since 2010, merger and acquisition (M&A) activity has been on the rise and with it comes plenty of opportunity for mid-market companies, especially in the mining and renewable energy sectors.

However, this spike comes during a slow economic time and buyers are more cautious this time around. Due diligence plays a key role in ensuring a successful deal.

Legal has as much of a role as financial in the due diligence process, says Steve Watson, a partner with Fraser Milner Casgrain LLP (FMC) in Toronto. "You need to make sure deals won't be prohibited by existing contracts and that the company has the appropriate consents in place." Other areas to examine include outstanding offers of employment and any ongoing lawsuits inherited.

The key thing sellers can do to speed up the process is to perform their own due diligence ahead of the deal, he advises. "The process is designed to find all the skeletons in the closet. A good vendor will have tried to do so themselves with a team of legal and financial advisers. Everyone knows what questions will be asked, so if you can clean up any problems, it makes the process go a lot smoother; and the vendor can be more certain they won't be hit for purchase price adjustments."

For more information, please see Denise Deveau’s Montreal Gazette and Vancouver Sun article Appetite growing in M&A field