2025 was a banner year for take-private deals and 2026 is on course to match it.

With $26.5 billion in private equity capital deployed on take-private transactions last year and four mega-privatization deals accounting for more than half of all PE deployment in the first two quarters of 2026, Canadian boards are increasingly likely to receive take-private proposals and must be prepared to respond appropriately.

Buyers often hold significant negotiating leverage, and directors must navigate a delicate balance: executing or deciding against a deal while discharging fiduciary duties to all stakeholders, including minority shareholders. Getting the process wrong exposes the board to regulatory scrutiny and civil liability.

We have outlined below some key considerations that a board of a public company should consider when faced with an unsolicited take-private proposal.

Director duties to stakeholders

Directors owe a general duty of loyalty to act honestly and in good faith, with a view to the best interests of the corporation. In addition, Canadian corporate law imposes a duty of care, requiring that directors exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Collectively known as fiduciary duties, these responsibilities come under heightened scrutiny in the context of a take-private deal when directors are required to assess whether the transaction is in the best interests of the company, having regard not only to the interests of shareholders but also to the interests of other stakeholders affected by the transaction. Canadian courts have confirmed that directors may be required to consider the interests of a broad range of stakeholders, including shareholders, employees, creditors, consumers, governments, the environment, and the communities affected by the company’s activities.

In evaluating a take-private transaction, directors should seek to ensure that their decision-making process is structured in a manner that attracts the protection of the business judgment rule. Under that rule, Canadian courts will generally defer to board decisions that are made honestly, prudently, in good faith, on an informed basis, and free of conflicts. The court’s role is not to determine whether the board made the best or perfect decision, but whether the board followed a reasonable process and arrived at a decision that falls within a range of reasonable alternatives. Accordingly, directors who undertake a careful and well-informed review of a proposed take-private transaction will generally be entitled to judicial deference, even where the transaction is subsequently challenged or its outcome proves imperfect. It follows that the board should thoroughly document its deliberations and decision-making process to show that directors have discharged their duties in a take-private transaction.

The special committee

The formation of a special committee of independent directors in accordance with securities laws is typically recommended to oversee the negotiation, approval and execution of any transaction, particularly when insiders of the target company are involved with the buyer.

To maximize effectiveness, boards should aim to appoint a special committee early in the process and provide them with a robust supervisory mandate, as well as the ability to engage their own independent financial and legal advisors.

Maximizing value

To carry out its duties, the special committee should ensure that any take-over transaction is superior to alternative transactions and the status quo.

Depending on the circumstances, including the size of the prospective buyer’s existing interest in the target company, a competitive bidding process may not be a practical possibility for every take-private transaction prior to signing the definitive agreement.

Definitive agreements generally include a “fiduciary-out” provision that allows the board to terminate the transaction if it receives an unsolicited offer from a third-party buyer that is superior to the original buyer’s offer (subject to paying any break fees). In circumstances where the special committee is not able to perform a robust market-check to identify alternative buyers, the special committee can consider negotiating the inclusion of a “go-shop” provision in the definitive agreement that allows the board to actively solicit alternative offers for a short period following the execution of the definitive agreement.

Structure of the transaction

The ideal structure for a particular deal will depend on a number of factors, including the parties’ financing and timing requirements, as well as tax consequences and any third-party approval requirements.

The vast majority of Canadian take-private deals proceed as a plan of arrangement, a court-supervised process that takes place under the target company’s governing corporate statute. To grant its approval, a court must be satisfied that the terms and conditions of the deal are fair and reasonable.

In certain circumstances, the buyer may find it advantageous to bypass the board and management and make an offer directly to the shareholders pursuant to a take-over bid. This path is typically viewed as more expensive and risky for the buyer, but the target’s board should be aware of this possibility if it decides to reject a take-private proposal.

Stages of a (typical) take-private transaction

  • Receipt of offer: The process starts when a bidding party makes their take-private proposal in writing.
  • Internal consideration: The board forms a special committee of independent directors to assess the offer, with the advice of legal and financial advisors.
  • Exclusivity agreement: The parties agree a purchase price on a non-binding basis and negotiate exclusivity terms.
  • Pre-signing period: Parties perform due diligence and tax analyses before finalizing a purchase price and negotiating a definitive agreement. 
  • Fairness opinions: Prior to approving a transaction, it is common practice for a board to receive a fairness opinion from a financial advisor regarding the fairness of the transaction to the company’s shareholders.
  • Approval and execution: The board and special committee agree to support the deal and pass a resolution to approve.
  • Announcement: The public announcement of the deal will typically provide the market with the key details of the take-private transaction.
  • Interim period: During the interim period, parties work towards obtaining regulatory, shareholder and court approvals.
  • Closing: There are typically very limited exits from a definitive agreement, and it is only available in certain prescribed circumstances.

Our recent take-private deal involvement

How Miller Thomson can help

A defensible take-private process depends on getting things right, from the composition of the special committee through to minority shareholder approval. Whether you are responding to an unsolicited proposal, evaluating deal structures, or considering making an offer to acquire a public company, Mack Hosseinian and Florind Polo regularly advise boards and special committees through every stage of a take-private transaction.