Crosbie & Company’s “Crosbie & Company Canadian Mergers & Acquisitions Report for Q3 2019” (the Report) reviews the minor slowdown in Canadian M&A activity in Q3 2019 following a record-breaking second quarter. While deal activity declined slightly in Q3 (776 announced transactions compared to 886 in Q2), the Canadian M&A market remained robust, posting its eleventh straight quarter (dating back to Q1 2017) with at least 700 transactions.

Highlights of the Report

  • Slight decline in transaction volume: 776 transactions were announced during Q3 2019 compared to 886 in Q2 2019, representing a 12.4% decrease from the previous quarter.
  • Non-mega deal transaction values align with recent trends: 767 non-mega deals (transactions valued at less than CAD$1B) were announced during Q3 2019, with an aggregate value of CAD$20.0B. This was on par with the average aggregate value of non-mega deals during the previous eight quarters (CAD$21.4B).
  • Cross-border activity remains steady while pure domestic deals see a noticeable drop: There were 336 announced cross-border transactions during Q3 2019 compared to 371 deals in Q3 2018, while there were 78 fewer Canadian buyer/Canadian target transactions, representing a 17% decrease year-over-year (378 in Q3 2019 compared to 456 Q3 2018).

Breakdown by transaction value

In Q3 2019, the Canadian M&A market had an aggregate deal value of CAD$45B, representing an average transaction value of CAD$26.1M, excluding mega-deals (CAD$1B+). This marked the first time in five quarters (since Q1 2018) that the aggregate deal value dropped below CAD$58B. Mid-market transactions below CAD$250M—a consistent and potent segment of the Canadian M&A market—accounted for 91% of the quarter’s transaction volume, yet were valued at only CAD$8.7B (approximately 19% of the quarter’s total M&A value). Deals under CAD$1B had an aggregate transaction value of CAD$20B, which was in line with the CAD$21.4B average value during the previous eight quarters.

The average size of mega-deals declined from CAD$3.3B in Q2 2019 to CAD$2.8B in Q3 2019. Of the nine mega-deals announced during this quarter, five were Canadian-targeted and the largest was an asset purchase transaction valued at CAD$6.2B.

Cross-border, domestic and foreign deals

Cross-border activity remained strong in Q3 2019 as the 336 cross-border transactions represented 54% of total deal value and 43% of total deal activity during the quarter. Canada/US cross-border transactions accounted for 66% of all cross-border activity, with 124 outbound transactions (Canadian buyer/US target) and 99 inbound transactions (US buyer/Canadian target). Indeed, US buyers were responsible for 71% of all Canadian targeted cross-border activity and 95% of the aggregate transaction value.

While Q3 2019 marked the eighth consecutive quarter with over 500 domestic transactions, domestic M&A activity experienced a 12.5% decrease in Q3 2019 (517 announced deals) compared to Q3 2018 (591). This year-over-year drop appears to be due in large part to the 78 fewer pure domestic (Canadian buyer/Canadian target) transactions compared to this time period last year.

Contrary to historical trends, Canadian buyers spent more money generating acquisitions domestically than abroad, spending 75 cents outside of Canada for every dollar spent within Canada. It follows that the most dramatic year-over-year decline was in the Canadian buyer/foreign target deal value, which totaled approximately CAD$32.6B in Q3 2018 and only CAD$8.2B in Q3 2019.

Industry Sector Activity

Real Estate continued to be the most active industry group in the Canadian M&A market: with 112 announced deals valued at CAD$19B, Q3 2019 marked the fifth consecutive quarter in which this sector accounted for over 100 transactions. The Telecommunication Services industry ranked second with a total deal value of CAD$5.7B. The Information Technology sector experienced a marked increase in deal volume (up 32% from 77 transactions in Q3 2018 to 102 transactions in Q3 2019), while Financial Services achieved the largest year-over-year increase in deal value (up over 450% from CAD$807M in Q3 2018 to CAD$4.5B in Q3 2019). Conversely, a few consistent Canadian M&A industry groups saw considerable year-over-year dips in total deal value, including Precious Metals (down 90% from CAD$8.9B in Q3 2018 to $869M in Q3 2019), Consumer Discretionary (down 60% from CAD$6.4B in Q3 2018 to CAD$2.6B in Q3 2019), and Energy (down 56% from CAD$9.3B in Q3 2018 to CAD$4.1B in Q3 2019).

Geographic distribution

Ontario and British Columbia remained the two most active provinces, accounting for 188 deals totaling CAD$17B and 131 deals totaling CAD$3.3B, respectively. Interestingly, Quebec’s 15% share of total deal volume accounted for only a 2% share of total deal value. In Q3 2019, Prince Edward Island posted the largest transaction in the province’s history – a private equity buyout of a drug manufacturer within the Healthcare industry valued at CAD$329M.


There is persistent optimism that the Canadian M&A market will remain robust, despite some public fear that the market—currently the longest bull market in modern history—may soon take a turn for the worse. Much of this resounding faith in the market’s resilience can be attributed to strong balance sheets, easy access to capital, aging business owners looking to monetize at current high valuations and buyers seeking to boost weak organic growth. As we prepare for 2020, it will be interesting to see whether the continued strength that has defined the Canadian M&A market throughout the 2010s will persist through the decade’s final quarter.

The author would like to thank Daniel Lupinacci, articling student, for his assistance in preparing this blog post.

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