Key Takeaways
- About one-third of Canadian businesses plan to pursue a major acquisition, marking a historically high level of deal intent.
- Canada’s nation-building agenda and large-scale infrastructure projects are expected to be a key driver of M&A activity in 2026.
- Canadian-to-Canadian transactions are expected to make up the bulk of dealmaking as companies look to build scale and expertise at home.
- Infrastructure-related services, health care, and AI-linked software and digital infrastructure are among the sectors expected to see the most activity.
- Trade uncertainty and potential tariff risks remain a concern, but deal structures such as earnouts are helping transactions move forward.
Introduction to Canadian M&A
The Canadian business landscape is expected to experience a surge in merger and acquisition (M&A) activity in 2026, driven by the country’s nation-building agenda, easing interest rates, and ample capital. According to a new report, about one-third of Canadian businesses plan to pursue a major acquisition, marking a historically high level of deal intent. Marco Tomassetti, president of KPMG Canada Corporate Finance, believes that this trend is driven by the need for companies to build scale and capacity amid trade uncertainty and major investment projects.
Current Business Landscape
Tomassetti notes that the current business environment in Canada is favorable, with interest rates having come down since 2023 and a lot of capital available from both Canadian and external sources. However, the trade relationships with the US have changed, and the imposition of tariffs has created uncertainty for businesses. As a result, entrepreneurs are looking for innovative ways to grow their businesses, and M&A activity is expected to increase. Tomassetti believes that Canadian-to-Canadian transactions will dominate the M&A landscape, as companies look to build scale and expertise at home.
Sectors Expected to See Most Activity
Tomassetti identifies several sectors that are expected to see significant M&A activity in 2026, including infrastructure-related services, health care, and AI-linked software and digital infrastructure. The infrastructure sector is expected to be driven by large-scale projects funded by the government and private investors, which will require companies to build capacity and expertise to deliver these projects. The health care sector has historically seen a lot of M&A activity, and this trend is expected to continue. The AI sector is also expected to see significant activity, driven by the growing demand for AI-related services and infrastructure.
Impact of Trade Uncertainty
Tomassetti acknowledges that trade uncertainty and potential tariff risks remain a concern for businesses. However, he notes that entrepreneurs are resilient and are finding ways to adapt to the changing trade landscape. One way to mitigate the risks associated with tariffs is to use deal structures such as earnouts, which allow companies to protect themselves against potential risks. Tomassetti believes that the macro conditions are strong, and the capital investment is strong, and that entrepreneurs will find ways to navigate the trade uncertainty and continue to pursue M&A activity.
Conclusion
In conclusion, the Canadian M&A landscape is expected to experience significant activity in 2026, driven by the country’s nation-building agenda, easing interest rates, and ample capital. Canadian-to-Canadian transactions are expected to dominate the landscape, as companies look to build scale and expertise at home. While trade uncertainty and potential tariff risks remain a concern, entrepreneurs are finding ways to adapt and mitigate these risks. As Tomassetti notes, the macro conditions are strong, and the capital investment is strong, and that entrepreneurs will find ways to navigate the trade uncertainty and continue to pursue M&A activity.