PwC says corporate transactions accounted for 71% of deals
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The Canadian M&A market continues to boom with U$73 billion worth of transactions in the first 6 months of 2019.
PwC Canada’s M&A mid-year review and outlook reveals that the average deal was valued at $184 million and that the overall total was boosted by 8 mega-deals led by the $10 billion takeover of Goldcorp Inc. by Newmont Mining Corp.
Corporate transactions accounted for 71% of deals with the remaining 29% completed by private equity firms and pension plans.
Deal volume was down 5% compared to the second half of 2018 but PwC Canada says this is due to acquirers taking longer on due diligence, especially with the increased risk of undisclosed cyber breaches at the target which could result in costly litigation.
"Strong cyber due diligence can be a game changer in the M&A process," says Dave Planques, National Deals Leader, PwC Canada. "It can help potential buyers figure out the shortcomings of their target's cybersecurity practices and the resulting cyber risk while also ensuring that the costs and time required to effectively address these issues are properly priced into the deal."
Technology and innovation along with trade and geopolitical tensions mean that it is important for the due diligence process to be robust but Planques says that doesn’t mean there will be more acquirers deciding not to proceed.
"Rather, this extended process will ensure the completion of the best deal possible for both sides. In the M&A market, there remains an abundance of capital and buyers have plenty of interesting targets to pursue," he said.
For the asset management industry, a recent report from Casey Quirk revealed that combinations often make costly mistakes with integration.
Growth in Quebec
Aside from the PwC Canada report, the recently appointed head of investment banking in Quebec for TD Securities is calling for a boom in the province.
Abe Adeham says the market is buoyant, a view supported by Bloomberg data which shows Quebec companies’ involvement in 309 deals in the first half of 2019 with a value of $24.1 billion.
At that pace, 2019 should beat 2018’s $39.1 billion full-year total from 655 deals.
“It’s going to be a very strong year,” Adham told Bloomberg. “The Quebec economy is doing well and companies here continue to do well and, whether it’s private or public, the mood is actually great.”
On TD’s presence in the province, he added that the close-knit business community means it is important to have “boots on the ground.”s
TD's new Quebec point man is pushing “an extremely local presence” to win more investment banking business in the province https://t.co/MhnoXy0LFb
— Bloomberg Canada (@BloombergCA) July 30, 2019
