In 2025, the Canadian M&A market remained resilient despite broader economic uncertainty. Trade tensions with the USA contributed to a subdued start, but activity picked up in the second half of the year as market participants adjusted to the new environment, commodity prices strengthened, and interest rates eased. Canada also reflected the global shift towards larger transactions - while the transaction count declined from 3,411 in 2024 to 3,294 in 2025, total deal value increased from USD264.16 billion to USD398.36 billion in 2025. Mid-market transactions (valued below CAD250 million) continued to represent the largest share of M&A deals in Canada by deal count, accounting for 86% of deals (down from 88% in 2024). Leverage levels for new acquisition financings were broadly consistent with prior years. Tariff uncertainty affected cross-border deal flow in 2025. Inbound activity softened in Q1 as tariff risk weighed on pricing, diligence and execution, but improved in Q2 as buyers became more accustomed to assessing and allocating that risk. Trade tensions also prompted Canadian investors to diversify into US assets and build a presence in the USA to mitigate tariff-related exposure, contributing to increased outbound deal flow throughout the course of the year. By sector, energy, utilities and mining were the most active sectors, with each recording an increase in deal value. This growth was supported in part by the infrastructure and energy demand associated with rapid AI-related investment. The wealth management sector also experienced a record year for M&A activity, driven in part by ownership succession at family-owned businesses and the resulting intergenerational transfer of wealth. Legal and regulatory developments Amendment reducing the criminal rate of interest Effective from 1 January 2025, the Criminal Code was amended to replace the former criminal-rate threshold (an effective annual rate exceeding 60%) with an annual percentage rate (APR) exceeding 35%. Given that an effective annual rate accounts for compounding whereas an APR does not, the amendments also changed the applicable method of calculation. The scope of the offence was further expanded to include offering or advertising credit at a criminal rate. These changes are not expected to materially affect most acquisition financings because the regulations provide an exemption for commercial loans where: the borrower is not a natural person; the credit is advanced for a business or commercial purpose; and the amount of credit advanced exceeds CAD500,000. Commercial loans between CAD10,000 and CAD500,000 that meet the first two conditions remain subject to a maximum rate of 48% APR. Accordingly, smaller commercial loans and certain small-ticket junior facilities may require closer scrutiny. Amendments to the Investment Canada Act and the Competition Act Recent amendments to the Investment Canada Act (ICA) and the Competition Act have increased regulatory scrutiny of transactions and, in turn, heightened closing risk and uncertainty. Amendments to the ICA and its regulations have broadened the scope of national security reviews applicable to investments by foreign investors. A national security review may be initiated if an investment by a non-Canadian could be injurious to Canada’s national security. Following the review, the transaction may be permitted to proceed, permitted subject to conditions, or blocked. The amendments also expand the authorities’ powers during the review process. These powers include extending the review period and imposing interim conditions, such as restrictions on access to or the transfer of assets or IP. In addition, economic security has been expressly recognised as a factor in the national security analysis. The analysis may therefore consider whether a Canadian business’s ties to a foreign state’s economy make the business vulnerable to leverage by that state. Given the highly discretionary nature of the ICA national security process and the fact that reviews may take months, these changes heighten uncertainty around closings, particularly with regard to timing and the ultimate ability to complete the transaction. Under the Competition Act, the Competition Bureau may review mergers and may apply to the Competition Tribunal if it considers that a merger is likely to prevent or lessen competition substantially in Canada. Amendments have introduced a rebuttable presumption that a merger substantially prevents or lessens competition where its Herfindahl-Hirschman Index (HHI), an index that measures market concentration, increases by more than 100 as a result of the merger and either: the post-merger HHI exceeds 1,800; or the parties’ combined market share exceeds 30%. Although the presumption may be rebutted with sufficient evidence that the merger is not likely to prevent or lessen competition substantially, this change creates a more demanding environment than the previous framework, under which market share and concentration evidence did not give rise to the same statutory presumption. The increased complexity of the merger review process has also contributed to longer Competition Bureau review timelines. Taken together, these amendments increase the likelihood that transactions will face more intensive and lengthier regulatory review. Obtaining regulatory clearance or otherwise resolving the review may take months. This may delay closings and increase the risk that a transaction will not be completed. From an acquisition finance perspective, prolonged regulatory reviews may lengthen the period between signing and closing and require financing commitments to remain available for longer periods. Commitment expiry dates, extension mechanics, and the alignment of financing commitments with transaction long-stop dates therefore require particular attention. Bank debt Bank debt has traditionally represented - and continues to represent - the largest source of acquisition financing in Canada, reflecting the dominance of Canada’s “Big Six” banks (the six largest banks in Canada). While these banks remain relatively conservative in their underwriting standards, their extensive relationships and early visibility into financing opportunities continue to position them at the forefront of the lending market. Banks will typically provide senior secured facilities comprising the majority of the debt financing required for an acquisition. Subject to the transaction structure, applicable law, and agreed security principles, the security package will generally cover all or substantially all of the assets of the borrower and guarantors and may include security over the shares of the target. Target-level guarantees and security may be implemented at or following closing. Direct lending Direct lending, whereby a non-bank private lender provides a loan directly to a borrower, has gained traction in Canada and become increasingly established since the 2008 global financial crisis. Increased bank regulation following the crisis tightened bank underwriting for certain borrowers and transactions, thereby creating gaps in the market. At the same time, compliance costs rose for banks. Private credit lenders are generally not subject to the same bank capital and liquidity requirements, which has helped them expand to meet growing demand. Market conditions from 2022 onwards further supported private credit activity. Interest rate increases implemented in response to elevated inflation following the COVID-19 pandemic and Russia’s invasion of Ukraine increased returns on many private credit loans, given their floating-rate structure. Higher rates also tightened bank lending and, in turn, allowed private credit to expand to fill the larger gap. In those market conditions, private lenders with longer-term committed capital were often able to continue deploying funds - although funding structures vary among lenders.  In 2025, economic uncertainty in Canada supported further growth in private credit. In volatile market conditions, borrowers placed particular value on private credit’s potential to provide speed, structural flexibility, and execution certainty and were often willing to pay a premium for those attributes. In parallel, private equity firms entered 2025 with significant levels of dry powder (committed but undeployed capital), which supported sponsor-backed acquisition activity. Regulatory developments may further reinforce direct lending’s role in transactions involving extended closing periods. As amendments to the foreign investment and competition law regimes come into effect, more transactions may be subject to governmental review, and review timelines may lengthen for affected deals. Where governmental review extends the period between signing and closing, parties may require committed financing that remains available throughout that period. Direct lenders’ ability to offer flexible commitment periods and execution terms may therefore be attractive in affected transactions. Although direct lending may be the sole source of acquisition financing, it is commonly used to bridge the gap between the borrower’s funding needs and the amounts banks are willing to provide. In such a hybrid debt financing structure, banks may provide senior debt, while private credit may provide junior debt or mezzanine financing. Unitranche financing, where senior and subordinated debt are combined into a single facility with one interest rate and one set of covenants, also gained popularity in the Canadian market in 2025. Such a structure can reduce the need for the borrower to negotiate with multiple lender groups, thereby facilitating faster execution - a particularly valuable advantage in volatile market conditions. Despite making significant headway in recent years, private credit remains smaller and less mature in Canada than in the USA or Europe, and its growth has been more modest. Canada’s “Big Six” banks continue to dominate the lending market. Furthermore, some of the factors that have driven the development of private credit in the USA and Europe - particularly bank retrenchment in response to prudential regulatory constraints - have not materialised to the same extent in Canada. In the near term, private credit will therefore likely remain primarily complementary to bank debt - although it may compete directly with banks in certain transactions. The global growth of private credit has attracted increased attention from Canadian policymakers, who have identified potential vulnerabilities, including limited transparency and interconnectedness with the banking sector. At the same time, policymakers in Canada have acknowledged private credit’s role in filling funding gaps and supporting new investments.  As private credit continues to evolve in Canada, its implications for acquisition financing will need to be monitored. Deal structuring In a year marked by volatility, misalignment of valuation expectations between buyers and sellers led parties to adopt more flexible purchase-price structures. Many acquisitions incorporated purchase-price mechanisms that reduced the amount of cash payable at closing and, consequently, the amount of immediate external funding required - although some of these mechanisms may create future payment obligations. The following mechanisms were used in 2025 to bridge the valuation gap and complete transactions. Seller financing Seller financing continued to gain momentum in 2025, following several years of increased use. Seller financing is an arrangement whereby the seller agrees to defer a portion of the purchase price to a future date, typically with interest – effectively becoming a lender to the buyer. The growth of seller financing reflects - among other factors - a more conservative approach to underwriting by banks, as well as the growing prevalence of independent sponsors and search funds, which may seek more flexible financing instruments. Beyond providing funding, seller financing may keep the seller economically exposed to the success of the business, aligning the seller’s interests with the acquirer’s. Earn-outs Earn-outs are contractual provisions included in M&A deals that defer a portion of the purchase price and make payment conditional on the achievement of certain post-closing performance targets. This mechanism is used to reduce the buyer’s risk of overpaying if the target company does not perform as expected. However, the use of earn-outs remains selective, particularly in deals where performance can be measured using clearly defined metrics that are less susceptible to post-closing manipulation; EBITDA-based targets remain among the most common. In 2025, earn-outs were also used to address increased risks related to businesses potentially exposed to tariffs. By linking a portion of the purchase price to a company’s future performance, the buyer shares part of that risk with the seller. If trade policy adversely affected the acquired company, the agreed-upon performance targets could become harder to reach and the purchase price could be reduced. In 2025, earn-outs were frequently considered in Canada–USA cross-border transactions involving businesses with material tariff exposure. Earn-outs, however, can create significant post-closing complexity. The increased use of earn-outs in recent years has also led to more frequent disputes and litigation. Payouts may be lower than sellers expect, while disputes concerning post-closing performance and the calculation of contingent consideration can create substantial costs and uncertainty for both parties. Rollovers Rollovers involve a seller receiving a portion of the purchase price in the equity of the post-closing entity or the buyer instead of receiving full payment in cash. The seller thus typically receives a combination of cash and shares. Rollovers continued to be used in 2025, particularly in cross-border transactions where they can help bridge valuation gaps. Although many rollovers involve management teams, they may also involve other shareholders to support continuity and alignment following closing. By reducing the cash consideration payable at closing, rollovers can also reduce the amount of external financing required. Outlook Tariff uncertainty that weighed on the Canadian M&A market in 2025 has continued into 2026, but market participants have become increasingly accustomed to pricing and allocating that risk. In the near term, public policy will likely be a driver of deal activity. Deal activity could therefore increase in sectors aligned with the Canadian government’s priorities - most notably, in defence and energy. As uncertainty persists and private equity dry powder remains substantial, direct lending will likely continue to grow and fill funding gaps. At the same time, private credit is attracting increased regulatory and policy scrutiny, which may affect the pace and form of its continued growth. Its interaction with the Canadian banking industry will remain an important development to monitor. 1. The case for Canadian private credit : A differentiated opportunity for institutional investors 2. CAASA-Private-Credit-in-the-2020s-FINAL.pdf  3. Non-bank financial intermediation in Canada: a pulse check - Bank of Canada 4. globalriskinstitute.org/mp-files/pdf-the-rise-of-private-credit-fueling-growth-or-brewing-risk.pdf/  5. Rapid growth in private credit has created vulnerabilities - Bank of Canada; New players, old risks: Financial stability in a changing landscape - Bank of Canada

Equity crowdfunding will soon have a new framework in which to operate in Canada and this is excellent news for investors and startups alike. On November 5, 2015, the Canadian Securities Administrators announced that regulatory authorities in Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia published the final version of Multilateral Instrument 45-108 - Crowdfunding (the “Equity Crowdfunding Prospectus Exemption”), which is expected to come into force on January 25, 2016. Crowdfunding will no longer be limited to advance purchases of goods and services in Canada, as the new Equity Crowdfunding Prospectus Exemption will allow startups to raise capital by issuing and selling securities to the public, using online funding portals, without having to file a prospectus. An offering document that meets regulatory requirements will nonetheless have to be prepared and published on the electronic funding portal. The document must contain certain particular information on the corporation, its officers, and the terms of the offering. ISSUER ELIGIBILITY CRITERIA Under the Equity Crowdfunding Prospectus Exemption, eligible issuers may raise a maximum of $1,500,000 per 12-month period. The main eligibility criteria for an issuer are namely that it be incorporated under Canadian laws and headquartered in Canada, that a majority of its directors reside in Canada, and that the issuer is not an investment fund. SUBSCRIPTION LIMITS FOR EACH INVESTOR Subscription limits for investors will vary depending on whether an investor is an accredited investor (as defined in the securities regulations) or not. In Ontario only, another category of investors, “permitted clients” (as defined in the securities regulations), is subject to its own specific investment limits. Investments by non-accredited investors will be limited to $2,500 per private placement (up to an annual maximum of $10,000, only in Ontario). Investments by accredited investors will also be limited, albeit to a greater amount of $25,000 per investment (up to an annual maximum of $50,000, only in Ontario). In Ontario, investors who are classified as permitted clients will not be limited in the amount of capital that they can invest. LEAD INVESTOR INCENTIVES It is no coincidence that accredited investors qualify for higher investment limits. The intention is to encourage them to act as lead investors who can set the pace for less experienced, non-accredited investors, by providing skills and expertise in management for the benefit of all investors. The emergence of lead investors is also encouraged by the fact that issuers will be able to distribute their securities under other prospectus exemptions during the crowdfunding distribution period with different prices, terms and conditions from those being distributed under the Equity Crowdfunding Prospectus Exemption. This type of model has already proven advantageous in the United States, where equity crowdfunding syndicates have been developed. Such syndicates, which are made up of angel investors and venture capital funds, allow small investors to invest their money in tandem with more experienced investors. CONTINUOUS DISCLOSURE Issuers who issue securities pursuant to the Equity Crowdfunding Prospectus Exemption will also be subject to certain continuous disclosure obligations, including the obligation provide the relevant securities commissions with financial statements and to make such financial statements available to investors within 120 days of their financial year end. The extent of such continuous disclosure obligations will vary in accordance with the total amount of funds raised by the issuer pursuant to one or more prospectus exemptions, from its date of formation to the end of its last financial year, based on the following thresholds: $249,999 or less: no requirement Between $250,000 and $749,999: financial statements accompanied by an examiner’s report or an auditor’s report $750,000 or more: financial statements accompanied by an auditor’s report In all cases, if the issuer is already a reporting issuer as defined by securities regulations, it will still be subject to any continuous disclosure obligations that already applied. CONCLUSION The Equity Crowdfunding Prospectus Exemption will open up markets to investors big and small, and allow them to build valuable relationships with startups early on. It will be interesting to see if the Equity Crowdfunding Prospectus Exemption will generate sufficient lead investors for equity crowdfunding syndicates to be put into place, as they have been in the United States.

After eight years of operation, the International Registry established pursuant to the Cape Town Convention and the Aircraft Protocol (in force in Quebec since April 1, 2013) has undergone a significant update. The Registry’s website has undergone a complete overhaul in two phases, the first of which was launched in September 2013. The first phase coincided with the coming into force of the Fifth Edition of the Regulations and Procedures for the International Registry, enacted by the International Civil Aviation Organization.1 The second phase, contemplated by the Sixth Edition of the Regulations,2 was initially planned for mid-2014 but ultimately came into force on May 28, 2015. “Generation II” of the Registry is an improvement which, in our view, will not only be easier for the various stakeholders to use, but also address the market’s demand for lower transaction costs associated with the acquisition and financing of aircraft objects to which the Convention applies. THE FIRST PHASE In September 2013, the Registry first made it possible to register an international interest in several objects at once, as part of a single registration process. Assuming the registration type and the named parties are the same for each aircraft object,3 an international interest4 can be registered in up to 100 objects at the same time, instead of having to register each interest separately, as was formerly the case. Consider the example of a transaction where the same interest is registered against a fleet of 10 airplanes, each of which has four engines (for a total of 50 aircraft objects). The efficiency gain is easy to measure. A user can now simply list the airplanes and engines affected by the registration, select the debtor and creditor, and register the interests in a single registration process. Priority searches benefit the same way. Up to 100 aircraft objects can now be searched at the same time. THE SECOND PHASE We believe that the creation of a virtual “closing room” is the most significant improvement. With the introduction of this closing room, Registry users can assemble and organize information on planned registrations of international interests so that the necessary approvals of all parties involved with the registrations may be obtained in advance thereof. The information regarding such planned registrations is called “prepositioned registrations” because their priority (or ranking) are being set in advance. Until such time as the parties consent to the closing of the transaction, and thus recognize that the prepositioned registrations are in effect, they are not considered registered and have no effect to bind the parties. The closing room works as follows: Assembling and managing the information required for a Closing Room Any Registry user can create a closing room. Such a user is called the “coordinating entity” and is in charge of assembling and managing all the information required in order to preposition registrations in the closing room. The coordinating entity can give other Registry users access to the closing room, but that access is in “read only” mode. Only the coordinating entity has the power to enter or modify information in the closing room, based on comments received from the other users involved. Locking the closing room, giving consents and paying fees Once the parties have agreed to the prepositioned registrations, their descriptions and their chronological order (thereby agreeing to the priority of each international interest), the coordinating entity locks the closing room. The Registry then sends the parties a notification, with an attached “pre-registration report” that lists and describes all the prepositioned registrations, including the specified chronological order of any multiple registrations with respect to an aircraft object. Each participant must then consent to the prepositioned registration within 10 days of the locking of the closing room. Otherwise, the closing room is automatically unlocked, unless the coordinating entity extends the locking period for an additional 10 days, which can be done up to 11 times. Entering the prepositioned registrations in the International Registry database The coordinating entity issues the instruction to authorize transmission to the International Registry after the required electronic consents have been obtained and the fees have been paid. The Registry then enters all the prepositioned registrations in the Registry database in the specified chronological order of the registrations. Only then are the international interests “registered” for the purposes of the Cape Town Convention. CONCLUSION These updates to the International Registry are clearly better suited to the ordinary course of aircraft financing and leasing transactions. Access to a closing room, and the ability to view prepositioned registrations, reduces mistakes and misunderstandings between the parties. Costs are reduced by eliminating the need for painstaking one-by-one registrations of international interests. Lastly, the ability to make changes before a closing room is locked gives the parties the flexibility required by their evolving negotiations and by the changes such negotiations can involve. 1 Available online: http://www.icao.int/publications/Documents/9864_5ed.pdf. 2 Available online: http://www.icao.int/publications/Documents/9864_6ed.pdf. 3 See Article I, paragraph 2, letter (c) of the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific To Aircraft Equipment, and Article II, paragraph 3, letter (a) of the Convention on International Interests in Mobile Equipment (Cape Town Convention) for a definition of “aircraft object.” 4 See Article 2 of the Convention on International Interests in Mobile Equipment (Cape Town Convention) for a definition of “international interest.”

The Lavery GO inc. Program team is happy to inform you that the Autorité des marchés financiers(AMF) announced yesterday the implementation of an equity crowdfunding exemption which allows startups to raise up to $500,000 in capital per year. Under this exemption, startups whose head office is located in Quebec may offer their shares to public investors through an online participative financing portal that is either relying on the exemption from the dealer registration requirement or is operated by a registered dealer and by using the pre-established offering documents which are available on this portal. The highlights of this crowdfunding exemption are as follows: The issuer may raise up to $250,000 per offering, subject to a limit of two offerings per calendar year. Investors may invest up to $1,500 per offering; however, there is no limit as to the number of offerings to which an investor may participate. The shares acquired under this exemption cannot be resold except under another prospectus exemption or a prospectus. The crowdfunding exemption will also be implemented in British Columbia, Saskatchewan, Manitoba, New Brunswick and Nova Scotia. This new exemption is excellent news for startups as it will allow them to access a new source of capital to support their development. It also sets up the tone for the much expected Regulation 45-108 respecting Crowdfunding, which is still under discussion among the Canadian Securities Administrators. For more information respecting this equity crowdfunding exemption, please contact Étienne Brassard or Guillaume Synnott. Étienne Brassard: 514 877-2904 | [email protected] Guillaume Synnott: 514 877-2911 | [email protected]