Canada’s M&A Landscape
While deal flow remains steady in 2024, transactions are frequently taking longer to close as a result of tighter credit, challenging negotiations around valuations and other key deal terms, general market uncertainty relating to interest rates and inflation and increased diligence by buyers.
Deal makers remain hopeful for a more robust M&A market in the last quarter of 2024 and into 2025 with tailwinds from cooling inflation and recent interest rate cuts in the United States and Canada. In addition, many sellers have been holding off selling with a view to higher valuations and a significant number of funds are sitting on capital that needs to be deployed. As noted in the article by Michael Caruso, Sarah Langille, and Articling Student Jennifer Jeong, the Boomer generation in particular is expected to continue to drive M&A transactions as a means of transitioning their businesses.
In anticipation of a more active M&A market, we are advising our seller clients to ensure their companies are sale ready by engaging a strong deal team, including investment bankers, well in advance of going to market. The article by our transportation lawyers, Louis Amato-Gauci, Jaclyne Reive, and Articling Student Jatin Kumar, notes the importance of sellers taking preparatory steps to clean-up their businesses with a view to maximizing value and reducing the amount of time required to address concerns raised by buyers in their diligence process.
The US market is performing better than the Canadian market and in speaking to our US contacts, our impression is that the M&A pipeline is improving in the US. We expect that our US clients, including in particular, US private equity funds, will drive M&A activity in Canada as they pursue an acquisition strategy flowing from stronger markets.
The balance of 2024 should prove interesting with a US election and anticipation of a federal election in Canada in the near term.
Please share your thoughts
We hope you enjoy this deep dive into the transportation and automotive industries and look forward to sharing more valuable sector analysis in future editions. Please reach out if you have any questions or comments – we’d love to hear from you!
Jay Hoffman, Chair, Business Law Group
Max Spearn, Leader, Corporate, M&A and Securities
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