Spring Update 2024

In this Edition…

As we return from another glorious Victoria Day long weekend, we are pleased to provide our latest quarterly update from the SkyLaw team. In this edition:

• SkyLaw has once again been selected as a Top Corporate Boutique by Canadian Lawyer Magazine!
• Chambers published last week our annual M&A guide. Confidence is returning to the M&A market in Canada and deals are getting done.
• We highlight three of our recently closed M&A transactions.
• We provide a reminder of important upcoming deadlines for clients, including the effective date of the change to the capital gains inclusion rate that is having an effect on M&A transactions.
• Our client spotlight is on Colorworks, a national autobody repair shop and SkyLaw client since 2011.
• We found a gem in the CBC News archives from the day of the verdict in the “Trial of the Century”.
• And: the Three Secrets to Success are finally revealed!

We are also pleased to showcase the work of Contau Lake artist Karin Aickele. In a sure sign of spring, the ephemeral trillium, the official flower of Ontario, is in full bloom and the kids are back out on the water.

Photo credit: Kevin West, Contau Lake, Victoria Day 2024 at sunrise.

Andrea Hill Featured in Canadian Lawyer Magazine as SkyLaw Recognized as a Top Boutique

We are thrilled to announce that we have once again been selected to receive Canadian Lawyer Magazine’s Top 10 Corporate Law Firms Award!

We are honoured to be recognized by our peers for SkyLaw’s “overall excellence, client satisfaction, and the high calibre of lawyers and leadership”, and appreciate the kind testimonials they submitted, such as: “The most committed-to-client-satisfaction firm I’ve worked with. An absolute joy, top to bottom.”

Andrea was interviewed for Canadian Lawyer’s article announcing the winners. The complete article can be read online here.

We appreciate all those who took the time to vote for SkyLaw, and we thank you all for joining us as we celebrate this exciting achievement!

SkyLaw’s Annual M&A Guide Published in Chambers

Legal publisher Chambers and Partners has published the 2024 edition of its Corporate M&A Global Practice Guide. We are pleased to be the exclusive author of the Canadian M&A section of this guide for the fourth year running.

SkyLaw’s full articles on Corporate M&A can be found at the following links:
● Law and Practice in Canada
● Trends and Developments in Canada

We have also recently provided two Chambers Expert Focus articles on the increasing use of earn-outs and recent changes to the foreign investment review regime in Canada.

Confidence is returning to the M&A market in Canada and deals are getting done. In a significant show of support for Canada, Warren Buffet praised Canada at the Berkshire Hathaway annual meeting this past weekend and said that they “don’t have any hesitancy about putting big money in Canada… You feel confident about operating there.”

Our Recent M&A Transactions

Cross-Border M&A: Project Snow

We were delighted to work with the great team at TKH Group N.V., a publicly-listed company based in the Netherlands, in its acquisition of technology company JCAI Inc. in Canada.

TKH specializes in the creation of innovative technology systems for high-growth markets. The company was founded in 1930 in Haaksbergen, the Netherlands, and its shares have been listed on the Euronext Amsterdam stock exchange since 1953.

JCAI specializes in visual guidance solutions for airports providing software that controls aircraft movement through de-icing areas and designs robust electronic message boards (like the stop sign in this photo from Pearson Airport in Toronto). JCAI offers embedded LED CEDD technology with electromagnetic sensors to identify aircraft positioning.

Together JCAI and TKH will combine the unique capabilities of TKH Airport Solutions’ smart airfield ground lighting with JCAI’s traffic guidance systems.

The SkyLaw team led all aspects of the transaction, including negotiating the share purchase agreement and coordinating the work of other advisors, including U.S. counsel and intellectual property, real estate and employment counsel.

We are excited to see the next evolution in airport traffic management and we have a whole new appreciation for what takes place on the ground as our planes go through the de-icing process!

Ontario Amalgamation: Move

Move Health Holdings Corp. is a Canadian company, established in 2019, that specializes in allied health and wellness services. Patients can access Move Health’s comprehensive services through in-person clinic visits, 24/7 telehealth and corporate wellness programs.

SkyLaw was delighted to represent Move Health in its recent strategic acquisition of Lyte Medical, a national telehealth company. SkyLaw negotiated the business combination agreement on behalf of Move and assisted in completing the acquisition by way of an amalgamation of a newly-formed subsidiary of Move Health with Lyte, following which the amalgamated entity became a wholly owned subsidiary of Move Health.

Cross-Border Not-for-profit Transaction: CMT

Chartered Market Technician Association (CMTA) is a not-for-profit, global credentialing body for technical analysts in the financial industry. CMTA was established in 1967 by a group of 18 members on Wall Street and today it has over 35,000 participants in its annual program.

CMTA expanded to the Asia-Pacific region in 2018 and in 2023, SkyLaw had the pleasure of representing CMTA in a transaction to expand to Canada by becoming the sole member of a Canadian not-for-profit corporation (Canadian Society of Technical Analysts). SkyLaw negotiated and drafted the transaction documents including the articles of amendment to give effect to the new, cross-border structure.

Client Spotlight: Colorworks

Colorworks Express Autobody Centers is an autobody repair service that was first established in 1991, and today it has over 20 locations across Canada! From major body damage to small cosmetic details, Colorworks provides a wide range of repair services through full service autobody centers, express repair shops, mobile (on-site) work and a valet service.

SkyLaw has proudly worked with Colorworks for over 13 years on a variety of transactional work including corporate reorganizations, share/asset sales and purchases, and general corporate matters such as annual general meetings and more recently, franchising matters. It has been a pleasure working directly with the CEO Kevin Carter who has been with the company for 30 years and continues to impress with the calibre and scale of operations of Colorworks. Check out this impressive video on the history, business and values of Colorworks.

Minutes after saying goodbye to Mr. Carter following a SkyLaw client event, one of our team members dinged the side of her car, and Colorworks managed to have the scrape fixed in no time! SkyLaw Team Member (name omitted to avoid embarrassment) said the following about her Colorworks experience: “They were super-efficient and did a great job. You cannot even tell it was there, it’s completely gone – brand new car!” 

Serving as both a helpful spelling reminder and an expression of their dedication to customers, their website says, “there is no ‘u’ in Colorworks, but there is a ‘u’ in our priorities.”

Important Deadlines

As we highlighted in our previous updates:

• May 31, 2024: The deadline is fast approaching to start reporting under the new child labour and forced labour legislation. The reporting obligations under the Fighting Against Forced Labour and Child Labour in Supply Chains Act apply to all entities listed on a Canadian stock exchange regardless of size, and to private companies with significant assets, revenue or employees as described in our blog here.
• October 24, 2024: Ontario not-for-profit corporations must come into compliance with the new Not-For-Profit Corporations Act by this date. More information can be found in our blog here.

Change to the Capital Gains Inclusion Rate Effective June 25, 2024

On April 16, 2024, the Canadian federal government announced a significant change to the capital gains inclusion rate from 50% to 66.6% effective June 25, 2024. The change applies to corporations, individuals and trusts (except that for individuals, the first $250,000 of gains will continue to be included into income at a rate of 50%).

The change is having an immediate impact on M&A activity as some sellers are rushing to close their deals prior to the deadline. Sellers will pay roughly an additional 9% in tax on gains realized after June 25, 2024 where the amount included in income is taxed at the top marginal tax rate.

The change is highly controversial and complex. Tax advice should be obtained.

Interestingly, the legislation introduced in the House of Commons to enact the Budget measures announced on April 16 does not include the proposed change to the inclusion rate. That omission does raise doubts as to whether there will be further changes, or whether the proposal will be dropped entirely. Today Deputy Prime Minister and Minister of Finance Chrystia Freeland said the legislation to implement the proposed tax change is coming before the House of Commons “in the coming weeks and certainly before the House rises for the summer”.

Three Secrets to Success – Revealed!

In our New Year’s Update, we wrote about Sir Graham Day’s three secrets to success:

When Kevin was at Dalhousie Law School, Sir Graham Day spoke to the students and revealed his three secrets to success:

1)     be the first to arrive and the last to leave each day;
2)     read The Economist; and
3)     … (unfortunately Kevin can’t remember the third one).

Kevin has had a subscription to The Economist ever since, and who knows where he’d be if he could only remember the third key to success.

After publishing our blog, our friends at Stewart McKelvey kindly connected us with Sir Graham, who graciously revealed to us his third secret to success:

3)     listening to others and, afterward, pondering what they’d said.

If Kevin had been a better listener and ponderer, perhaps he would have recalled this important life lesson.

Listening is a vital and underused skill. In our line of work in particular, good listening is required for successful negotiation. As a Greek philosopher, Zeno of Citium, famously said: “The reason why we have two ears and only one mouth is that we may listen the more and talk the less”.

Hear, hear!