The acquisition of another company is often a game-changer for a business, but it can also bring with it a great deal of stress and uncertainty.
For Clearford Water Systems, the decision to acquire Koester Canada and its Team Aquatic division was a great business move.
The acquisition, which was finalized in November, rounds out the water management firm’s service offering. Now, Clearford is able to operate much like a utility provider, constructing its own pipelines while also building and operating all its own waste-water treatment facilities.
Though everything is now flowing smoothly with the company’s new additions, the transaction did not come without its headaches.
“It was quite complex,” says Kevin Loiselle, Clearford’s president and CEO.
To navigate the complicated purchase, Clearford called upon the dedicated team of business lawyers at Perley-Robertson, Hill & McDougall LLP/s.r.l. to oversee the entire process.
M&A expertise
The transaction was crossborder, with the majority of sellers based in the United States. This adds a layer of complexity as both the buyer and sellers need to be conscientious of tax and corporate laws in the other country.
Clearford Water Systems, is a public company trading on the TSX Venture Exchange. As a result, there were specific rules the company had to follow to ensure the details of the negotiation were not made public prior to a definitive agreement being in place. The company worked closely with legal counsel to ensure all public company requirements were met.
The financing of the acquisition was also not cookie cutter.
“Most times, you pay the money and you buy the company,” says Michael Gerrior, a partner with PerleyRobertson, Hill & McDougall and a member of the firm’s business law group. “Because of the financing structure Clearford has, you can’t necessarily do that in straight lines.”
Clearford obtained backing from two investors to finance the deal, though one supplied equity while the other offered debt. Ultimately, the interests of these parties and the terms of the investments had to be accommodated in negotiations and the final documentation.
Loiselle credits the team at Perley-Robertson, Hill & McDougall with ensuring the transaction went through, despite the myriad of complications. In particular, Robert Kinghan, a partner at the firm and the head of its business law group, had a huge hand in its success.
“Without that kind of assistance, this deal would have collapsed,” says Loiselle.
The art of the close
In complex M&A transactions such as this one, there is a tendency for the process to leave everyone involved exhausted by the end. As Loiselle puts it, people get “battle weary.”
As a result, it often falls to the legal team to rally both sides and keep the momentum going.
“The end game is closing,” says Gerrior. “You’ve got to close deals — that’s what makes money for your client.”
As an Ottawa-based business, Clearford was also pleased to be able to work with a local law firm rather than having to go to Toronto to receive top-notch legal services.
“The acquisition is working out well for Clearford,” says Loiselle. “It’s turned out to be a really good decision for us.”
To learn more about how Perley-Robertson, Hill & McDougall LLP/s.r.l. can assist with your M&A, visit perlaw.ca.
Clearford Water Systems
Clearford offers a non-traditional water and waste-water management system that is less costly and more envirofriendly than the typical municipal model.
Koester Canada, now called Clearford Koester Canada, designs and builds water and waste-water treatment plants. Clearford Waterworks, formerly Team Aquatic, is the operational division of the company. Its team of highly skilled personnel are trained to maintain and run Clearford’s treatment facilities.
The process uses primary treatment tanks, or biodigesters, in front of its pipe networks, meaning wastewater undergoes primary treatment before it reaches the plant. That leads to a lower volume of liquid only sewage to be transported and allows for the use of much smaller pipes and much smaller treatment plants.
The installation is also less invasive and in many cases can be done with horizontal drilling, which prevents the need to excavate large swaths of road.
The firm also employs leak-proof, plastic piping.
By contrast, traditional treatment systems transport waste-water through massive PVC or concrete pipes that are prone to leakage. While concerns often focus on sewage leaking out, Clearford president and CEO Kevin Loiselle explains that it’s actually more common for groundwater to leak into sewage lines.
In many cases, the concrete pipes that are installed are up to 25 per cent larger than needed to account for the groundwater that will inevitably leak in. This leads to more water having to be both transported and sanitized, making the whole process more costly and much less environmentally friendly.
Learn more at clearford.com.
