ARTICLE | August 03, 2026

Most Canadian companies planning a U.S. expansion ask one question:

“How do we get into the U.S.?”

Far fewer ask an equally important one:

“How do we eventually get out?”

At first, that sounds premature. After all, the focus is usually on customers, hiring, operations, and growth—not selling the business. But after working with cross-border businesses for years, I’ve found one consistent theme:

The structure you build on day one often becomes the structure a buyer inherits years later.

And that’s where early planning can either preserve enterprise value—or quietly erode it. Consider a Canadian manufacturer that establishes a U.S. subsidiary to serve the Midwest. Fiveyears later, a strategic buyer wants to acquire the U.S. business.

On paper, the deal looks simple. In reality, the U.S. entity now holds excess cash, unrelated investments, intellectual property, and assets that support the Canadian parent. What should have been a straightforward transaction now requires a corporate reorganization before the sale can even begin.

The consequences?

• Higher legal and tax costs

• Longer negotiations

• Greater execution risk

• Reduced leverage during price discussions

Or consider a technology company that funded its U.S. subsidiary through years of undocumented intercompany loans.

During due diligence, buyers request loan agreements, transfer pricing documentation, withholding tax support, and board approvals. The business itself may be outstanding. But uncertainty rarely increases valuation. Instead, buyers often respond with larger escrows, purchase price adjustments, or expanded diligence—not because the company isn’t valuable, but because the documentation wasn’t built along the way.

This is why I believe entry planning is really value planning.

When expanding into the U.S., we naturally spend time discussing:

• Entity selection

• Capitalization and financing

• Transfer pricing

• State tax exposure

• Ongoing complianceThose are all essential conversations.

But an equally important question is:

Will today’s structure still make sense if the business is sold, recapitalized, carved out, or receives private equity investment five or ten years from now?

Some questions worth asking early:

• Will the U.S. subsidiary remain a clean operating company?

• Does the financing structure support future transactions?

• Where should key intellectual property reside?

• Would our documentation withstand buyer due diligence today?

No one can predict whether the eventual transaction will be a stock sale, asset sale, carve-out, merger, or PE investment. The objective isn’t to predict the exit. It’s to preserve optionality. Because optionality creates negotiating leverage. And negotiating leverage creates value. The strongest exits rarely begin when a buyer appears. They begin years earlier through thoughtful cross-border planning that aligns tax strategy with long-term business objectives.

For Canadian businesses expanding into the United States, entry planning and exit planning shouldn’t be separate conversations—they’re the same conversation.

What planning decisions have you seen create unexpected challenges—or opportunities—during a transaction?