Canadian M&A showed considerable resilience in 2025. M&A volumes remained relatively robust as interest rates normalized, valuation gaps started to narrow, and regulatory conditions improved.
This resilience was remarkable given the unusual macroeconomic landscape triggered by volatile U.S. trade policy. Deal flow disruption was most acute in the first half of the year, but as 2025 continued, M&A regained significant traction as dealmakers adjusted to a “new normal,” at least for the short term. Buyers and sellers were laser focused on value drivers and offset heightened complexity through creativity, diligence and careful execution.
Overall, while deal volume over the first three quarters of 2025 dropped slightly (down 7%) from the same period in 2024, deal value grew markedly (up 90%). This shift towards larger deals (with some mega-deals) was most noticeable in public M&A and was driven principally by corporate buyers. Acquirers showed conviction in their strategic vision and determination to seize on tactical opportunities amid mixed market sentiment. The growth in deal value was facilitated by favorable borrowing and regulatory conditions. The fall in deal volume reflects the novel uncertainty brought by disrupted North American trade dynamics.
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U.S. M&A had a very strong 2025. Goldman Sachs reports 45% year over year growth in total M&A volumes, 108% growth in mega-deal volumes, and 57% growth in sponsor M&A. Notwithstanding this robust year for M&A, U.S. and Canada cross-border deals experienced a significant decline, again likely due to North American trade policy uncertainty.
M&A in the year ahead
Tailwinds outweigh headwinds to give reason for optimism regarding Canadian M&A in 2026.
Tailwinds include that the Bank of Canada, having lowered rates four times in 2025, is generally expected to keep interest rates on hold in the near term. Inflation has cooled and steadied, and the low Canadian dollar will increase the appeal of Canadian targets to U.S. and other foreign buyers.
There continues to be large amounts of dry powder among financials. Private equity sponsors also continue to face a backlog of portfolio companies and investor pressure to pursue exits. That the TSX hit record highs in 2025 bodes well for an IPO revival. Government policy in Canada has become notably more investment friendly. Promoting growth in mining, energy and infrastructure is now a key priority.
Government spending also looks set to increase, including in such areas as defense and housing. Goldman predicts continued strength in U.S. M&A in 2026 and for the deal landscape to be defined by strategic repositioning and building for scale, which should be favourable for U.S. cross-border M&A into Canada.
Headwinds include that unpredictable North American trade policy endures. This raises concern that the macroeconomic fundamentals of the Canadian economy could slowly weaken. These concerns could be exacerbated by developments around the joint review of CUSMA, i.e., the Canada-United States-Mexico Free Trade Agreement and its uncertain outcome, which review is scheduled to be completed by July 1, 2026.
Another macroeconomic event that could dampen M&A activity is any significant burst of the “AI bubble” some market analysts believe has formed. In addition, worldwide CEO confidence in the prospects for the global economy in 2026 remains mixed, reflecting macroeconomic concerns in overall global economic activity.
Mining, energy, and infrastructure
Recent months have seen several developments favourable for further investment and M&A in Canadian mining, energy and infrastructure. Most notable are the passage of the Building Canada Act (with its promise of federal project approval within two years), the institution of the Major Projects Office (to help steer projects through expedited regulatory approval), and the Canada-Alberta energy MOU (which significantly changes course in Canadian energy policy). While these initiatives are not without risk or controversy, they send a clear market signal that the new federal government intends to play to Canada’s strengths in natural resources.
Mining was once again the most active industry sector in Canadian public M&A through the first three quarters of 2025, accounting for almost 40% of deal volume. We expect this to continue through 2026 as critical minerals and shoring up supply chains remain a key priority amid ongoing geopolitical tension.
Oil patch M&A in 2025 was unusually active relative to recent years, evidencing confidence in the short and mid-term outlook for conventional energy. Notably, this upswing predated the announcement of the Canada-Alberta MOU. Given the energy-friendly terms of the MOU, including its pivot to industrial carbon pricing over a hard cap on oil and gas emissions, we expect continued momentum in this space. That said, developing events in Venezuela represent a wildcard going forward. Renewables and transmission and distribution should also continue to show strong activity.
Private equity
2025 was a banner year for Canadian private equity (PE). Deal value through the first three quarters reached C$56.5 billion through 483 transactions, producing the strongest nine-month period on record. The four busiest industry sectors, accounting for approximately 54% of PE deals, were, in order, life sciences, information technology, industrial and manufacturing, and automotive and transportation. That said, 42% of this deal value (i.e., C$23.5 billion) was made up by only four mega take-private transactions.
On the buy side, PE dealmaking evidenced a readiness to overlook market uncertainty to seize on high-conviction opportunities. Earnouts remained a common (although by no means widespread) risk mitigation tool. On the sell side, exits at valuations needed to deliver compelling investor returns remained challenging for some sponsors, resulting in continued resort to GP-led secondaries and continuation vehicles (CV).
Other alternative liquidity options have included minority interest sales, dividend recaps and NAV loans. Some sponsors opted to sell second-tier holdings at discounted valuations to meet investor demands for liquidity. These broad trends could continue. On the other hand, a dissipation of market headwinds could quickly open the exit window.
Various encouraging signs point to the possibility of an IPO revival, including that the TSX hit record highs in 2025 and greater optimism regarding equity financing relative to debt financing than we’ve seen in recent years.
As is generally the case globally, family capital is becoming an increasingly important player in Canadian M&A. Areas of focus include real estate, technology and impact investing.
Competition and foreign investment review
Potential regulatory scrutiny should continue to be front of mind for dealmakers through 2026.
Recent amendments to the Competition Act fortify the Competition Bureau’s enforcement tools and have made merger reviews longer and more complex. New presumptions of anti-competitive harm shift the burden to merger parties where statutory concentration thresholds are crossed, increasing time spent on defining markets and market share calculation. The scope of the mandatory pre-closing notification regime has been expanded and increases the Bureau’s authority to prevent closing of a notifiable transaction.
Transactions not subject to mandatory notification (and not voluntarily notified) remain subject to potential challenge for three years post-closing. Roll-ups and serial acquisitions remain a key focus. The Bureau has most recently signalled its intention to focus on technology and digital ecosystems.
Heightened geopolitical tensions over recent years have increased the rigour of national security reviews under the Investment Canada Act (ICA) in connection with inbound M&A. Understandably, government scrutiny has been most intense around transactions involving mining, energy or infrastructure. We expect this to continue. Recent amendments to the ICA’s national security guidelines instruct that economic security will factor into the government’s analysis.
That said, given the distinct pro-investment focus of the new federal government, we expect the regulatory review process to be undertaken with particular attention paid to associated market signalling.
Artificial intelligence (AI) and M&A
AI and M&A intersect on three levels. Momentum steadily built on each of these over 2025, and we anticipate this to continue over 2026.
First, AI has become a significant deal driver, although not to the same extent in Canada as in the U.S. PitchBook advises that the global race to build AI infrastructure has triggered the single largest deployment of investment capital in history. Aggregate hyperscaler spend is projected to surpass US$6.4 trillion through 2030, including by way of various innovative joint ventures and partnerships.
Below these AI giants, AI is driving the full spectrum of M&A activity, from vertical integration to horizontal consolidation. M&A booms in tech aren’t new. What sets the AI M&A boom apart is the speed of the tech’s evolution and the ever-growing number and breadth of players involved.
Second, AI tools are increasingly being used in deal execution by M&A parties and their advisors. AI is enhancing standard deal processes by making them more efficient and accurate. AI is also enabling additional deal processes that were previously too expensive, too time-intensive or simply unpractical.
Notable on the latter front are the innovative ways AI is being harnessed by buyers and financial advisors to assist with target identification (e.g., qualitative analysis of unstructured datasets) and valuation (e.g., supercharged scenario modelling and sensitivity analysis). AI can also greatly assist with post-closing integration of the target’s operations.
AI applications in legal work range from deeper contractual due diligence through document drafting and review. Overall, effective AI adoption has been likened to a vehicle you steer to accelerate your work, not a self-driving car.
Third, depending on the transaction, AI considerations are informing due diligence and certain deal terms (e.g., representations and warranties). The degree to which this is the case depends on the target’s business and the centrality of AI to that business. Does the target: (1) develop its own proprietary AI, (2) use third-party AI in its products or services, or (3) simply use third party AI in its own internal processes?
A complication on this front is that the interaction of AI with intellectual property law remains unsettled in several important ways. Ongoing proceedings in Canada, the U.S. and England are being closely followed and should shed more light. The situation is similar with AI-adjacent regulation (e.g., privacy). Regarding AI-specific legislation, the federal government recently signalled that its AI policy is more focused on AI adoption than regulation.
Lastly, AI M&A is somewhat novel in that a target’s “crown jewels” can sometimes include key personnel and AI talent. This has led to “acqui-hires” where critical deal points include employment terms and equity incentives.
For more insights and commentary, visit Fasken’s M&A Knowledge Centre.
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Sarah Gingrich is Co-Leader of the Firm’s Capital Markets and Mergers & Acquisitions (CM and M&A) Group. Her practice is focused on securities and capital markets, mergers and acquisitions, shareholder activism and corporate governance. Canadian and international corporations, underwriters and investors rely on Sarah for her practical, results-oriented approach to complex legal issues across a wide range of industries, including energy, oil and gas, mining, technology, transportation and financial services.
Sean Stevens is Co-Leader of the Firm’s Capital Markets and Mergers & Acquisitions (CM and M&A) Group and the Chair of the Ontario Region’s Business Law Group. His practice is focused on domestic and cross border mergers and acquisitions, private equity transactions, corporate reorganizations and infrastructure projects. Clients include public and private companies, private equity funds and their investors, business owners and project sponsors and financers.
Grant McGlaughlin is co-leader of the Private Equity Group and practices in the areas of mergers and acquisitions, private equity, corporate finance, governance and sensitive and complex transactions. He provides superior service and legal advice to public and private issuers, underwriters and private equity funds in a broad range of industries including mining and natural resources, technology and industrial.
Neil Kravitz is the Co-Leader of our Montreal office Corporate group and the Firm’s Cross-Border and International Practice. Neil is recognized as a leading lawyer in mergers & acquisitions, securities law and cross-border transactions. He acts for domestic and foreign acquirers and targets, issuers, entrepreneurs, private equity funds, and investment banks with a practical, deal-oriented approach. Neil advises on public and private M&A transactions, equity and debt financings, shareholder activism and corporate governance. Neil regularly advises Boards and Special Committees on governance and ESG matters.
Gesta Abols is Co-Leader of the Firm’s Cross-Border and International Practice. He is a trusted advisor to leading private equity firms, strategic acquirers, boards, and special committees on complex mergers & acquisitions, shareholder activism, corporate governance, and strategic investments. Known for delivering clear, actionable guidance on high-stakes transactions, Gesta brings structure and insight to the most challenging deal environments.
Kareen A. Zimmer is a corporate and business lawyer, providing practical and timely legal advice to Canadian, American and international clients in mergers & acquisitions, complex commercial transactions and regulatory matters. Her experience includes private equity investments, cross-border transactions, public private partnerships, joint ventures and corporate reorganizations. Kareen's practice spans a variety of sectors, including insurance & other financial services, infrastructure & transportation (bridges, rail and ports), lotteries & gaming and manufacturing.
Paul Blyschak’s practice is focused on mergers and acquisitions, private equity, corporate and commercial matters, and project development.