Innovation and Opportunity in Canada’s M&A Market

With a clearer picture of Canada’s post-Covid business landscape beginning to emerge, both buyers and sellers in the M&A world are working out new approaches to dealmaking. Together with Mergermarket, Datasite brought together several industry insiders to share their perspectives on the future of M&A in Canada.

Heather West, Mergermarket’s Editorial Director for the Americas, moderated the discussion. She kicked off the conversation by noting that the rise in deal volumes following May 2020 had finally seen a downturn and asked the panelists what they thought was driving this trend.

Rob Olsen, a M&A partner at Deloitte Canada, expressed optimism about the outlook for future deals, despite the slowdown of the post-Covid explosion.

Fotini Gagaoudakis, an M&A partner at Davies Ward Phillips & Vineberg in Montreal, agreed. She pointed out that there are still significant reserves of dry powder in search of targets, and that the uncertainty left by COVID-19 is creating a push to get transactions done while the opportunity is open.

An Aggressive, Seller-Friendly Market

The panelists highlighted a rise in alternative M&A structures like earnouts and novel strategies like preemptive bids for high-quality assets, driven in part by the desire to quickly lock in deals.

“We’re seeing a lot more approaches from private equity funds directly to private companies,” said Andrew Kemper, a partner at Capital West Partners. “Pre-emptive bids are something that’s always happened in the public market, but we are seeing it a lot more in the private market right now.”

The experts felt that many buyers who lost out on opportunities when the pandemic hit are now eager to strike while the iron is hot; that urgency is motivating them to offer deals that sellers simply can’t pass up.

“Companies that weren’t even thinking about selling, when they see the multiples at accelerated levels…” Rob said. “Why not take advantage of it?”

Viewers shared the panel’s optimistic outlook. 100% of respondents to the first audience poll predicted an increase in Canadian M&A volumes over the next year – 70% anticipated growth and 30% anticipated strong growth.