Financial services is a frontrunner for its willingness to embrace transformation
Canada’s productivity crisis is key to improving the mergers and acquisitions market in 2025, as firms risk losing competitiveness on the global market.
But there is cautious optimism that the M&A market will continue to recover this year despite challenges including potential policy changes from the US administration such as tariffs that have been part of the narrative since President Trump was re-elected.
A new report from PwC Canada shows that deal activity saw a modest increase from July to November 2024. There were 1,068 deals in Canada with a total value of $227 billion in the period according to the firm’s analysis of Capital IQ data.
Financial services is a frontrunner thanks to it embracing technology to drive transformation. The report says that the sector has a strong appetite for growth through inorganic strategies and is actively acquiring technology-enabled businesses to optimize operations, reduce costs, and enhance customer engagement.
Notable deals in the financial services sector announced in 2024 include National Bank's Acquisition of Canadian Western Bank, Mubadala Capital's Acquisition of CI Financial, and Scotiabank's Investment in KeyCorp.
Other sectors that are set for expansion due to focus on innovation and efficiency are advanced manufacturing, hi-tech, and healthcare technology. However, productivity remains the area highlighted for improvement.
"Canada's productivity crisis means that Canadian businesses need to take immediate actions to ensure their long-term success. The uncertainty brought about by potential policy changes from the new US administration coupled with the acceleration of the digital revolution and the rise in geopolitical risks adds another layer of challenges for Canadian businesses," said Michael Dobner, National Economics Leader at PwC Canada. "However, these multiple challenges also present a unique opportunity for dealmakers to be a key part of the solution, by developing and implementing acquisition strategies that address these challenges."
The report also notes that private equity investments are expected to play an important role in addressing productivity challenges though consolidation of smaller businesses for scale benefits and investment in automation and technology.
