Crosbie & Company’s quarterly Canadian M&A Report has indicated an overall decline in activity for the first quarter of 2015, with total deal volume down 7% and total value down 46% from the previous quarter.

Deal size

Accounting for the decrease in deal value is the fact that the majority of transactions this quarter took place in the mid-market segment. While mid-market deals (under $250 million) represented 90% of all transactions this quarter, they accounted for only $9 billion, or 20% of total deal value.  Mega-deals (over $1 billion), on the other hand, accounted for $26 billion in value, with a total of 8 transactions during Q1 2015.

Activity by sector

The most active sector by deal volume this quarter was Real Estate, with 104 transactions totalling $6.7 billion. This is consistent with past performance: real estate has been the most active sector for eleven consecutive quarters.

With 80 transactions totalling $11.3 billion, Industrials was a heavy-hitter this quarter, taking the top spot in terms of deal value and second only to Real Estate in terms of volume.

Following closely behind Industrials was Financial Services with over $9 billion in deals. Information Technology and Customer Discretionary were also quite active this quarter, closing 79 deals each.

Geographical distribution

Ontario, British Columbia, Alberta, and Quebec were the most active provinces this quarter, making up 88% of all deal activity.  Ontario’s first quarter performance, representing 39% of all activity nationwide, is up significantly from Q1 2014.

Cross-border deals comprised 42% of all activity in Q1. Canadian outbound transactions exceeded inbound transactions in terms of both deal volume and deal size. In terms of volume, Canadian companies making foreign acquisitions exceeded the rate of foreign companies acquiring in Canada by a rate of 1.5 times.  In terms of value, outbound transactions outpaced inbound transaction by a factor of 9 times.

The author would like to thank Erika Anschuetz, summer student, for her assistance in preparing this legal update.

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