M&A projections for 2025 | Insights from Torys LLP

As we look ahead to 2025, the M&A landscape in Canada is poised for continued growth and activity following a strong recovery in the latter half of 2024. Despite potential challenges from geopolitical tensions and trade disputes, the year is expected to be marked by optimism and robust dealmaking.

In 2024, Canada experienced a resurgence in M&A activity, driven by various macroeconomic factors such as a lower interest rate environment, private equity firms with ample capital, and favorable transaction financing terms. This resulted in larger deal sizes, with the total domestic public M&A deal value reaching approximately $63 billion by the end of the year, a significant increase from the previous year.

The resurgence in public M&A activity in 2024 has spilled over into the private M&A sector, with a total transaction value of $32 billion surpassing that of the previous year. As macroeconomic conditions continue to support dealmaking, the growth of private equity fund exits is anticipated to further boost private M&A activity in 2025.

While most Canadian M&A deals tend to fall in the small- to mid-value range, there has been a notable increase in the number of deals valued at over $1 billion in both the public and private sectors. Sectors such as materials, technology, and financials have emerged as key areas of focus for M&A activity in Canada.

In the materials sector, mining and metals transactions involving critical minerals have been prominent, driven by the accelerating demand from the energy transition. Policy changes under the Investment Canada Act aim to protect Canadian firms in the sector while streamlining the approval process for transactions. The technology sector is also seeing significant interest, particularly in areas such as data centers, AI, and digital infrastructure, supported by government initiatives to boost domestic AI capacity.

The financial sector remains a consistent source of M&A opportunities in Canada, with institutional investors, strategic buyers, and private equity firms actively seeking investment opportunities. Notable deals in the sector include the acquisition of Canadian Western Bank by National Bank of Canada and the privatization of CI Financial Corp. by Mubadala Capital.

In the private M&A space, information technology (IT) and industrials have emerged as the most active sectors, with a growing focus on infrastructure software and cybersecurity. Investors continue to prioritize IT investments, driving deal activity in the sector.

Overall, the M&A outlook for 2025 in Canada is optimistic, fueled by favorable market conditions, strong deal activity in 2024, and continued interest from acquirers and investors across a range of sectors. With supportive macroeconomic factors and a conducive regulatory environment, the stage is set for another active year of dealmaking in the Canadian market.