M&A Continues Strong Performance in Third Quarter
Merger and acquisition (M&A) deals are on the rise, indicating a positive shift in the economic landscape. In the third quarter of 2024, there were 655 M&A deals announced, marking a 1% increase from the previous quarter and a notable 13% increase from the same period last year. This steady growth in deal volume, coupled with the prevalence of larger deals, signals a return of confidence in the Canadian M&A market.
Although the volume of deals is increasing, the value of transactions in the third quarter saw a slight decline of 10% to $66 billion. However, it was a robust period for “mega deals,” with 20 transactions exceeding $1 billion, totaling $49 billion in deal value. Additionally, mid-market activity for deals valued under $250 million remained strong, with a 6% increase in transaction volume compared to the previous quarter.
By sector, the mining industry emerged as the most active sector in the third quarter, with 91 deals totaling $11 billion. There was also a notable rebound in real estate deals and increased M&A activity in precious metals, communications, and tech sectors.
According to Richard Betsalel, managing director at Crosbie & Co., the positive momentum in M&A activity is attributed to more stable economic conditions in Canada and the U.S., along with a positive equity market performance. Factors like record levels of private equity dry powder, a favorable interest rate environment, and increased availability of debt capital are further bolstering this positive deal environment.
Looking ahead, while the incoming U.S. administration might bring about economic uncertainty, the potential impact on cross-border deal activity could be short-lived as there is mutual incentive to resolve any issues quickly. Despite potential challenges, the overall outlook for M&A activity remains optimistic.
