Chasing the last five percent of a takeover without another fight

The situation

By the time Tejinder called, the tender offer had already closed and the numbers looked good on paper: ninety-five percent of the target's outstanding shares had been tendered, well past any threshold that would normally let an acquirer treat a deal as done. The problem was the other five percent, held by a scattered group of shareholders who had simply not tendered, some by inattention and a few, it would turn out, deliberately, and none of whom the acquirer had a direct line to before the bid expired.

Stepping back, the acquirer was a mid-sized strategic buyer that had launched a formal takeover bid for a target company in a related industry, in a transaction in the fifteen to thirty million dollar range once the untendered shares were factored in at the offer price. Tejinder, a paramedic by original training who had moved into corporate development several years earlier, led the deal team alongside Burak, the acquirer's office manager handling the transaction's administration and paperwork. Neither had run a takeover bid through to its second step before; this was the acquirer's first bid of this scale, and both had assumed, reasonably enough given how the process is often described casually, that a ninety-five percent tender result meant the deal was effectively finished and the remaining detail was administrative.

It was not. Owning ninety-five percent of a target gives an acquirer significant control over the board and the company's direction, but it does not give full ownership, and full ownership was what the acquirer needed to fold the target's operations, systems, and finance function into its own structure without a minority shareholder base sitting alongside it indefinitely, with its own rights to financial disclosure and its own interests in how the combined business was run. The holdouts, including a shareholder named Emre who had specifically declined to tender despite repeated reminders from the depositary bank, were entitled to stay shareholders of the target for as long as they chose, unless the acquirer took a further formal step to acquire their shares as well.

That further step exists under Ontario corporate law. Where a bid has been accepted by holders of ninety percent of the shares the acquirer did not already own, as had happened here, the acquirer can compel the remaining holders to sell on the same terms as the bid, and a holder who thinks the price is too low can go to court to have fair value fixed. It was not automatic, it was not free, it required its own notice period and its own disclosure, and it was not something Tejinder's team had built into their closing budget or their internal timeline for reporting the deal as complete to the acquirer's own board.

What made this urgent

The urgency was not that the five percent threatened the deal outright. It was that every week the second step took to complete was a week the acquirer could not fully integrate the target's finance function, could not consolidate its financial statements without a minority interest complicating them on the balance sheet, and could not present the acquisition to its own lenders and board as finished business rather than an open item on a status report. The acquirer had told its own financing sources the deal would close on a specific timeline, and that timeline had already assumed the tender alone would deliver full ownership, an assumption that turned out to be wrong.

What mattered most to Tejinder and Burak, when we first spoke with them, was not squeezing the last dollar out of the holdout shareholders. It was cost control and predictability, in that order. They had seen, from a prior transaction at another company where Tejinder had briefly been involved in an advisory capacity, how a contested second-step process could spiral into months of negotiation, formal valuation proceedings, and legal fees that dwarfed the value of the shares actually being acquired. Their instruction to us was blunt from the first meeting: get this done on a number and a timeline we can tell our board with confidence, even if that number is a little higher than the original offer price.

That instruction shaped the entire strategy from the outset. A more aggressive acquirer might have tried to force the compulsory acquisition through at the original tender price and litigate any objection a holdout raised, betting on the strength of its legal position to eventually prevail. Tejinder and Burak did not want that fight, not because they doubted the acquirer's legal footing, but because an uncertain multi-month dispute, with its own legal costs and its own drag on integration, was worse for their business than a modestly higher payout delivered on a known date they could plan around.

Emre's refusal to tender complicated things further. He had not stated a price he wanted, had not responded to the depositary's routine reminder notices, and had simply declined without explanation, which left the acquirer unable to know in advance whether a small premium would resolve the matter cleanly or whether Emre intended to contest the fair value determination formally, a process that could itself take months and require an independent valuation report if it went that route, adding cost and delay neither side particularly wanted.

What we did

1. Confirmed the acquirer's post-bid ownership percentage against the statutory threshold for compulsory acquisition, verifying the exact share count directly from the depositary's tender results rather than relying on the acquirer's internal summary, because the process was only available at all once that threshold was actually cleared, and we needed certainty before committing the acquirer to a plan built entirely around it.
2. Mapped out the compulsory acquisition mechanics in plain, non-technical terms for Tejinder and Burak, explaining that the remaining holders would receive the same consideration as the original bid unless a different value was negotiated or later determined through a formal process, so the team understood from the outset exactly what the mechanism could and could not guarantee them going in.
3. Reached out informally to the identifiable holdout shareholders before issuing any formal notice, including Emre, to understand whether their non-tender reflected a genuine price objection, an administrative oversight, or something else entirely such as a simple wish to remain invested, because the answer changed whether a quiet negotiated resolution was realistic or whether we should plan and budget for a contested valuation from the very start.
4. Negotiated a modest price increase with Emre directly once it became clear through conversation that his objection was genuinely about value and not a delay tactic or a broader grievance, calculating the increase carefully against the deal's overall size so the acquirer's board could see plainly that it was immaterial to the transaction's overall economics even though it exceeded the original tender offer price.
5. Drafted and issued the formal compulsory acquisition notice to all remaining holders on the revised terms, making sure the notice period and every element of the required disclosure content matched what the statute required exactly, since a defective notice at this late stage would have reopened the very delay and uncertainty the acquirer had been trying hardest to avoid throughout. A notice that later had to be corrected and reissued would have cost more time than the original negotiation with Emre had.
6. Built a fixed internal timeline and cost estimate for the acquirer's board and its lenders, setting out each remaining step to closing with a specific date attached to it, because Tejinder and Burak's central ask throughout the file was predictability, and a written, dated timeline let them manage expectations upward inside their own organization with confidence. We updated it each time a step actually closed, so the board was never working from a stale projection.
7. Completed the compulsory acquisition and confirmed full ownership once the statutory steps and the revised payment to the remaining holders were complete, then coordinated directly with the acquirer's accountants to confirm the target could now be consolidated into the acquirer's financial statements without any minority interest carve-out remaining on the books. That confirmation was the specific milestone Tejinder had been asked to report to his own board.
8. Documented the entire second-step process in a closing summary for the board, setting out the ownership threshold, the negotiation with Emre, and the final terms in one concise record, so that anyone reviewing the transaction later, including a future auditor or lender, could see exactly how full ownership had been reached and why the final price differed from the original tender offer.

The outcome

The compulsory acquisition closed roughly ten weeks after the original tender offer, bringing the acquirer to full ownership of the target with no remaining minority holders. The remaining holders, including Emre, received a price modestly above the original tender offer, an increase the acquirer had agreed to in order to avoid a contested valuation process with an uncertain timeline and an uncertain final cost that could have run considerably higher.

That premium, once totalled across the small remaining share block, added a low six-figure amount to the overall transaction cost, a fraction of the deal's total value but a real concession the acquirer had not planned to make and had not budgeted for at the outset. The acquirer's finance team absorbed that cost as a one-time closing adjustment rather than reopening any part of the original financing package, which kept the impact contained to a single line item its lenders accepted without further discussion. The ten-week second step also pushed the acquirer's full integration timeline back by roughly two months against its original internal target, delaying the point at which the target's finance and operations functions could be fully folded into the acquirer's own systems.

What the acquirer got in exchange was exactly what Tejinder and Burak had asked for at the first meeting: a known number and a known date, reached without a formal fair value dispute, an independent valuation process, or a drawn-out hearing. The acquirer's board accepted the revised timeline without significant difficulty once it saw clearly that the alternative had genuinely been an open-ended dispute rather than a modest and easily quantifiable premium. Tejinder later told us the experience had changed how the team scoped future acquisitions entirely, building a second-step contingency into both the budget and the closing calendar from day one on every subsequent deal, rather than treating a successful tender result as the finish line the way this one had been treated at the start.

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