(Image caption: Michael Dobner, PwC Canada)
Following a challenging cooldown period from 2023–24, the Canadian mergers and acquisitions (M&A) market has stabilized and seen steadier deal flow in 2025, which calls for an outlook of pragmatic optimism, PricewaterhouseCoopers (PwC) said.
“It’s encouraging to see the Canadian M&A market moving in a positive direction, with dealmakers demonstrating renewed confidence,” said Sean Rowe, PwC Canada’s national deals market and value creation leader, in the press release.
According to PwC’s 2026 Canadian M&A outlook, from July 1 to Sept. 30, the country witnessed 642 deals with a total announced value of $138.8 billion.
PwC expected Canada to maintain its trajectory in the first half of next year, owing to steadier volume, a sharper focus on value creation, and deeper diligence processes.
“The consistency of transactions reflects a market that is not only resilient but also strategically focused on value creation,” Rowe said. “As we look ahead, the scale of deals and the momentum in local transactions signal a strong foundation for growth and innovation across key sectors in 2026.”
PwC acknowledged the decrease in Canada’s real gross domestic product (GDP) by 1.6 percent (annualized) in the second quarter of 2025 and an expected growth of under one percent through 2026.
However, PwC emphasized the resilience of M&A activity. With two percent inflation and seven percent unemployment, PwC noted that businesses are recognizing the need for strategic M&A to navigate such conditions, ensure future growth, and spur innovation.
“In a period of slower economic growth and persistent high financing costs, Canadian businesses are making strategic M&A a priority,” said Michael Dobner, PwC Canada’s national leader of economics and policy practice, in the press release.
“We’re seeing dealmakers sharply focused on acquiring new capabilities that not only tackle today’s challenges but also build lasting value, especially in key sectors such as defence, mining and AI, which are being supported by government initiatives,” Dobner added.
Despite uncertainty related to tariffs and geopolitical dynamics, PwC noted that local deals and transactions in which Canadian buyers invest in Canadian targets made up half of the country’s M&A activity. PwC added that these types of deals have gained momentum, expected to keep anchoring the market next year.
“The activity in local deals suggests that the Federal Government initiatives are resonating and investors are following the government’s call to invest in our domestic market,” Dobner said. “Canadian buyers investing in Canada highlight a significant trend: leveraging our relative economic advantages and fulfilling commitments to our allies by adopting state-of-the-art technology.”
Rather than merely reacting to shifts, PwC explained that dealmakers are proactively utilizing M&A to snatch new opportunities and make their businesses stronger and more innovative.
The report perceives 2026 as a time of change, with creative and opportunistic dealmakers able to capitalize on new growth areas and collaboration between the public and private sectors helping actualize these opportunities.
M&A outlook’s findings
In its report, PwC had the following key takeaways:
- Last November, the federal budget outlined priorities in defence, energy, critical minerals, AI, and housing, with these commitments expected to drive M&A transactions as businesses adapt to these strategic areas
- In the next decade, with $81 billion allocated to defence in this year’s federal budget, over $1 trillion may flow into the sector, with the investment positioning Canadian companies to acquire capabilities and boost defence readiness, increasingly focused on European markets with comparable North Atlantic Treaty Organization (NATO) capabilities
- With more than $2.9 billion in federal investments announced from 2024 to 2025 spurring efforts in the AI technology arena to improve digital independence, the country’s commitment to sovereign AI is driving M&A activity and joint ventures
- The shift in wealth and business assets amounting to approximately $3 trillion from aging Canadians to the next generation is driving up M&A in wealth management, with businesses seeking to expand and provide more holistic services