A roll-up sponsor spends years assembling a group precisely so that a single strategic buyer will eventually pay more for the whole than the sum of what each site cost on its own. Getting there cleanly depends on structural details set years earlier — how minority sellers were rolled in, and whether the group has quietly grown into a size that changes which regulator gets a say.
Key takeaways
A roll-up sponsor spends years assembling a group precisely so that, at the end, a single strategic buyer will pay more for the whole than the sum of what each site cost on its own. Getting there cleanly turns on structural decisions made years earlier — how minority sellers were rolled in at the start — and on whether the group has quietly grown into a size that pulls a new regulator into the room.
Canadian acquisition pricing convention is not one number across every deal size. Deavo's capital-stack material describes pricing typically expressed as a multiple of SDE, often around 2 to 3 times, on the smallest deals; a multiple of EBITDA, often 3 to 5 times, once a deal reaches the $1 million to $5 million band; and enterprise value typically around 6 to 8 times EBITDA once a deal moves into the $5 million to $30 million, sponsor-led band. A consolidated group selling to a strategic acquirer is usually priced on that last convention, not on the SDE multiple any one of its individual sites would have fetched sold on its own — part of the arithmetic behind why a roll-up is assembled in the first place.
Competition Act merger notification runs on two separate tests that both have to be checked, not one. The party-size test looks at whether the parties, “together with their affiliates,” have assets in Canada or gross revenues from sales in, from or into Canada exceeding four hundred million dollars in aggregate value. The transaction-size test, separately, asks whether the value of the target's assets or shares being acquired exceeds a threshold that was set at $70,000,000 as enacted, and is adjusted annually against nominal GDP and published by the Minister in the Canada Gazette — no current-year figure should be quoted without checking that publication directly. A roll-up that is nowhere near $400 million on its own can still be notifiable, because the party-size test is measured on the combined size of buyer and target together: a large strategic acquirer's own assets or revenue alone are often enough to clear that threshold, leaving the transaction-size test, applied to the group being bought, as the only real question. Where a deal is notifiable, a proposed transaction cannot close before the end of a 30-day waiting period after the Commissioner receives the required information, and a second 30-day clock runs if the Commissioner requests supplementary information.
It is also worth knowing what is no longer available as a defence during that review: the efficiencies defence that used to justify an otherwise anti-competitive merger on cost-saving grounds is repealed outright — Competition Act s.96 now reads only “[Repealed, 2023, c. 31, s. 10]”.
A voluntary sale that every shareholder signs onto — the sponsor's own majority stake and a rollover seller's minority position alike, on the same share purchase agreement — does not, on its own, trigger dissent rights under the CBCA at all. Dissent under s.190 attaches only to a defined list of triggers: an amalgamation other than a short-form one, an export continuance, a sale of substantially all the corporation's property under s.189(3), or a going-private or squeeze-out transaction — an ordinary negotiated sale that everyone contractually agrees to is not on that list. Where a minority holder is being compelled rather than persuaded, the usual mechanism is a drag-along clause built into the unanimous shareholder agreement at formation, covered when the original investor's governance rights were first set up, not the dissent statute. A minority holder who believes the exit process itself was unfair still has a separate route: an oppression claim under CBCA s.241, where a court can order a range of remedies including a forced purchase of the complainant's securities.
Where the exit itself is structured as a share-for-share exchange into the acquirer's own stock rather than an all-cash sale, an ITA s.85(1) rollover election can again defer the gain, the same mechanism a seller who rolled equity into the platform at the start may already be familiar with — a second deferral on the same underlying position, years apart.
A five-site consolidated group, combined EBITDA $12M, is approached by a strategic acquirer with over $1B in Canadian assets. The group's own assets and revenue are nowhere near the $400 million party-size threshold on their own, but because the test is measured on buyer and target together, the acquirer's size alone satisfies that test. The transaction itself, priced at roughly 7 times EBITDA (in line with the mid-market convention), works out to roughly $84M — above the $70,000,000 transaction-size threshold as originally enacted, and likely above its current, GDP-indexed value too, though that figure has to be confirmed against the Bureau's own published number rather than assumed. On these numbers the deal is notifiable and cannot close until the applicable waiting period runs. Two of the group's five original sellers rolled a combined 8% equity stake into the platform at acquisition and remain minority shareholders; both sign the same share purchase agreement as the sponsor and receive their pro-rata share of proceeds — no dissent right arises, because nobody was compelled into a sale nobody agreed to.
Yes. The party-size test is measured on the combined assets or revenue of buyer and target together, not the target alone — a large strategic acquirer's own size can satisfy that test by itself, leaving the separate transaction-size test, applied to the group being sold, as the real question.
Not automatically. CBCA dissent rights attach only to a defined list of triggers — certain amalgamations, an export continuance, a substantial-asset sale, or a going-private or squeeze-out transaction. An ordinary voluntary sale that every shareholder, majority and minority alike, signs onto is not on that list.
No. The efficiencies defence that previously allowed cost savings to justify an otherwise anti-competitive merger is repealed. Competition Act s.96 now consists only of a repeal notice.
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