Divesting the one division only a rival could realistically buy

The situation

What worried Zofia was not the price Deniz was prepared to pay. It was the thought of the division's engineers reading about a stalled sale in a trade newsletter before she had told them anything definite, after she had already let slip, informally, that a sale was coming. She had watched a comparable transaction at a former employer sit frozen for months while a regulator asked for information nobody had prepared to provide, and it was that memory, not the price, that brought her to us before anything had been signed.

Zofia led corporate development for a larger engineering group headquartered outside the region, and that year her mandate included divesting a regional division that had spent years competing directly with a smaller Wasaga Beach firm for the same municipal contracts. Deniz, who ran that smaller firm, was the buyer her parent's board had settled on, chiefly because a purchaser at this size needed to already understand the municipal engineering market, and the short list of people who did was, inevitably, a list of competitors. Ewa, a minority partner who held a meaningful stake in the division from an earlier investment, had different priorities again: she wanted a clean exit and was less concerned with how the integration went afterward.

The transaction, once the numbers were worked through, sat in the range of thirty to fifty million dollars once real property, contracts, and goodwill were counted. That size put the deal close enough to notification thresholds that guessing was not an option. Zofia's own team had assumed, without checking, that a sale of this kind between two Ontario engineering firms would not attract attention. That assumption was the first thing we tested.

Three parties with three sets of interests, none of them identical, made the file more delicate than a straightforward purchase and sale. Deniz wanted the deal to close on a timeline he could plan around, and he wanted the parent locked out of shopping the division to anyone else while the notification process ran. Ewa wanted certainty of payment and no lingering liability, and had little patience for a lengthy exclusivity period that might leave her waiting on a deal that stalled. Zofia's own priority sat between the two: her board wanted the sale done cleanly and without controversy, and the division's staff, several of whom had already heard rumours, needed a defined timeline more than they needed the highest possible price.

Because the buyer competed directly with the division, Zofia knew before we ever confirmed it that the deal had at least the shape of a competitor acquisition, exactly the category a notification review exists to catch. What she did not yet know was whether the transaction crossed the size thresholds that would require one.

The legal question

The core issue was whether this transaction size and structure required advance notification before closing, and if so, what that meant for timing. Merger notification rules exist to give a reviewing body the chance to look at transactions above a certain size before they close, so that a deal cannot simply be completed and only questioned afterward. Both tests are measured on a Canadian basis. The size-of-parties test looks at the combined assets in Canada, or revenues in, from, or into Canada, of both sides together with their affiliates, so a very large global group can still fall below the line if its Canadian footprint is small. The size-of-transaction test looks at the assets in Canada of the business being acquired, or the revenues generated from those assets. Where shares are being acquired, there is also a separate voting-share threshold to clear. Both figures needed to be calculated carefully rather than estimated, using the Canadian assets and revenues of the parent's group and of Deniz's firm together for the size-of-parties test, and the division's own Canadian asset and revenue figures for the size-of-transaction test.

Because the division being sold competed directly with Deniz's own firm in the same municipal contract markets, the transaction had the profile of a competitor acquisition, which is exactly the category notification review exists to catch. That did not mean the deal was in trouble. Many transactions of this size and shape proceed with notification and clear on a predictable schedule. What it meant was that closing without checking, on the assumption that a private engineering firm sale would not attract scrutiny, risked either an unwitting breach of the notification requirement or a much longer delay if the question surfaced only after signing.

The three-party structure complicated the calculation. Because Ewa's minority stake in the division sat alongside the parent's controlling interest, we had to work out whether her interest needed to be treated separately when sizing the transaction, and whether her exit could be structured in a way that simplified rather than complicated the notification analysis. Deniz's role as the buyer meant his own firm's size fed directly into the size-of-parties calculation, which made accurate figures from his side just as important as from the division's.

We also had to consider the risk that arose from the parties' misaligned interests: if Deniz pushed for speed and Ewa pushed for certainty of payment before Zofia's side had confirmed what process the transaction needed, someone might sign something binding before the threshold question was answered. Protecting the sequence, not just the numbers, was as much a part of the legal question as the calculation itself.

There was also a narrower question buried inside the broader one: even once we confirmed notification was required, we had to work out whether the parent's divestiture and Ewa's separate exit could be filed as a single coordinated transaction or needed to be treated as two related but distinct events. Filing them separately risked creating two overlapping review timelines instead of one, which would have made the already tight sequencing problem among the three parties considerably worse. Getting the filing structure right the first time mattered as much as getting the threshold calculation right.

What we did

1. Calculated the notification thresholds before any binding document was drafted. We worked through the size-of-parties figure using the Canadian assets and revenues of the parent's group and of Deniz's firm together, since that test looks at each side's full corporate group measured on a Canadian basis rather than the division alone, and the size-of-transaction figure using the division's own Canadian asset and revenue figures, because getting either number wrong risks an unwitting breach or months spent preparing a notification nobody needed to file. The calculation confirmed the deal sat inside the range requiring notification, which meant we could tell Zofia clearly what process the transaction would need to go through and roughly how long it was likely to take.
2. Advised Zofia to pause the informal handshake understanding already taking shape with Deniz. She had already told the division's staff a sale was coming, but signing anything binding before the notification question was settled risked putting all three parties in breach before the ink dried. We explained why the pause protected her board's own position rather than just slowing the deal down, and gave Zofia language she could use with Deniz so the delay read as diligence rather than cold feet.
3. Mapped the three parties' interests onto a single structure. Deniz wanted closing certainty, Ewa wanted a clean and certain exit, and Zofia's board wanted the sale done without controversy and the division's staff kept in place through the transition. We built a term sheet that sequenced these: staff retention commitments for a defined period, a fixed payment schedule for Ewa's stake, and a closing condition tied to notification clearance, so each priority had a specific, enforceable answer.
4. Prepared and filed the notification submission. This meant assembling the transaction description, the parties' market overlap, and supporting financial detail into the form the review process requires, written to be clear rather than defensive, since an unclear filing tends to invite more questions rather than fewer. We drafted the submission around the division's own operating figures so it would withstand scrutiny without needing a follow-up round.
5. Negotiated the exclusivity terms Deniz was pushing for. Deniz wanted the parent locked out of shopping the division to any other buyer while notification was pending, a commitment Zofia's board was reluctant to make without knowing how long the review might run. Ewa's advisors, wanting flexibility if the review dragged on, resisted an open-ended commitment too. We negotiated a shorter, conditional exclusivity window that gave Deniz meaningful assurance without exposing Zofia's side to a long freeze if clearance took longer than expected.
6. Coordinated the interim period between filing and clearance. We built covenants governing how the division would be run while the notification was under review, so that Zofia could keep operating normally without inadvertently changing the business in ways that complicated the eventual closing, and so she could tell her board with confidence that the business Deniz would receive at closing was the business he had agreed to buy.
7. Managed communication among all three parties as clearance approached. Because interests diverged, we kept Zofia informed of what Deniz and Ewa's advisors were pushing for at each stage, so she was never negotiating from a position of surprise when trade-offs came up in the final weeks. When clearance came through slightly ahead of the original estimate, we made sure the closing mechanics were ready to move immediately rather than leaving the parties waiting on paperwork.

The outcome

The transaction closed roughly four months after the notification was filed, within the range Zofia had been told to expect once the process began. The notification cleared without requiring an extended review, which was the outcome the careful early calculation had been aimed at protecting, and it meant Zofia avoided the kind of open-ended delay that had left a comparable deal frozen for months at her former employer.

Zofia's board did not get everything it wanted. It had hoped to avoid granting Deniz any exclusivity at all, preferring to keep its options open in case the review ran long; what it agreed to instead was a shorter, conditional window, in exchange for Ewa's advisors accepting a fixed payment schedule rather than a contingent one, which gave the deal enough certainty on both sides to move forward. Zofia had gone into the negotiation hoping to preserve full flexibility for the parent throughout the review; what she settled for was a narrower commitment than she wanted, one that turned out to be enough once the filing itself moved on schedule.

The staff retention terms held, and the division's engineers largely stayed on through the transition, which mattered to Zofia's standing with her board. Deniz's two municipal bids, which had been quietly driving the timeline pressure on his side of the table, both went ahead with the combined firm's capacity behind them, one of which his firm was awarded in the months after closing.

What Zofia took from the file was less about the specific numbers and more about sequencing: the sale her board signed off on looked different from the handshake understanding that had started it, not because the underlying business changed, but because checking the threshold question early gave everyone room to negotiate terms that would not have existed if the notification issue had surfaced only after a binding agreement was already signed. Ewa's exit closed cleanly alongside the parent's sale, without the two having to be treated as separate, overlapping filings, which was the structural risk we had flagged as the harder part of the legal question from the start.

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