Founder and shareholder contributions, private placements to accredited investors under NI 45-106, private-equity investment from institutional sponsors, and mezzanine financing layered behind a senior facility. The right instrument depends on the stage of the corporation, the use of proceeds, the founder's tolerance for dilution, and the cost of capital available from each source on the relevant timeline.
Generally no. Most private placements rely on one of the prospectus exemptions in NI 45-106 most commonly the accredited-investor exemption, which allows the issuer to distribute securities without preparing a prospectus, provided the eligibility, disclosure, and post-closing filing requirements of the exemption are satisfied. The trade-off is that the securities issued under an exemption carry resale restrictions that do not apply to prospectus-qualified securities.
Because the file has two transactions at once. The commercial transaction with the investor, preferred-share terms, board rights, anti-dilution, and restrictive covenants are themselves complex and consequential, and most of the operative provisions live in instruments that survive the closing for years. The securities-law transaction running alongside it requires a defensible exemption analysis, accurate disclosure, and the right post-closing filings. Each side can be done wrong without affecting the other in the short term, and each side has consequences that surface in diligence on the next round or on the exit.
Yes, particularly on acquisitions, management buyouts, and growth-equity transactions where the senior facility does not support the full amount of the financing required. Mezzanine sits behind the senior facility on subordinated terms and is documented under an intercreditor and subordination agreement; the economics fall between senior debt and common equity, and the instrument is generally either a subordinated note with warrant coverage or a preferred-equity instrument.
Both. The firm's capital-raising practice is split between issuer-side mandates (founders, growth-stage corporations, and family-office investees) and investor-side mandates (private-equity sponsors, sophisticated angels, and family offices investing into private corporations). The work in either direction benefits from what we see across the table on the other side.
Debt financing is borrowed money repaid with interest, with the lender carrying no ownership in the business. Equity financing is capital exchanged for an ownership stake, with no obligation to repay but with dilution of existing shareholders. Debt suits predictable cash flow; equity suits growth-stage companies that cannot or should not commit to fixed repayments.
Pre-money valuation is what a company is valued at before new investment is added. Post-money valuation is the pre-money figure plus the new investment. For example, a $4 million pre-money valuation with a $1 million investment produces a $5 million post-money valuation, with the new investor owning 20%. Which figure is quoted materially changes the dilution math.
A term sheet sets out the headline economic and governance terms of a proposed investment valuation, share class, board rights, protective provisions, and exclusivity. Most provisions are non-binding placeholders for the definitive documents, but specific clauses such as exclusivity, confidentiality, and expense reimbursement typically are. Clear labeling of binding versus non-binding terms is essential.
An accredited investor is an individual or entity that meets specific financial thresholds under Canadian securities law for individuals, generally $1 million in net financial assets, $5 million in net worth, or $200,000 in income (or $300,000 with a spouse). Private placements are typically offered to accredited investors to qualify for a prospectus exemption.
Private equity investors typically require a board seat or observer right, veto rights over major corporate decisions, anti-dilution protection, pre-emptive rights on future financings, information rights, and drag-along and tag-along provisions. They may also require liquidation preferences on their shares. These rights are set out in the shareholders' agreement and the share terms.
