Restarting Deals: Strategies for Success

The start of a new year is setting the stage for an uptick in merger-and-acquisition (M&A) activity, with falling interest rates, aging business owners assessing their options, and dealmakers around the globe eager to deploy capital.

According to Michael Morrow, managing director and national leader of M&A and capital markets at BDO Canada, there is a significant demand for transactions from both buyers and sellers. The landscape is reminiscent of 2021 when M&A activity surged after the initial impact of the Covid-19 pandemic.

While 2025 might not reach the peak deal volume seen in 2021 due to recent economic growth moderation, the outlook remains positive for continued M&A growth. Joe Millott, principal of Acquatio, emphasizes the importance of strong and healthy capital markets to foster a robust M&A environment.

In the Canadian market, wealth management and insurance advisory services are highly sought after by industry players looking to expand and external investors seeing potential in stable earnings. Valuations in the insurance sector are particularly high, with firms being valued at four to five times revenue.

Highlighting a recent deal, Abu Dhabi-based Mubadala Capital acquired CI Financial Corp. for $4.7 billion, valuing the enterprise at $12.1 billion. This transaction underscores the interest in Canadian assets, especially those with exposure to the U.S. market.

There’s a shared sentiment that Canada is an attractive destination for global investors due to its stability and solid economic fundamentals. As the Canadian dollar weakens against the U.S. dollar, domestic acquisition targets become more appealing to potential buyers.

Looking ahead, opportunities for growth exist in both wealth management and insurance sectors. Morrow notes that many small practices set up decades ago are now highly valued, attracting interest from larger consolidators looking to acquire distribution channels.

Overall, the M&A landscape in Canada remains vibrant, with ample opportunities for sellers due to high demand from buyers. While it’s an exciting time to explore potential deals, advisors should be prepared for the complexities of the process, as around 50% of agreed-upon deals face challenges in reaching completion.