Canadian M&A on Record Pace

By Generational Equity

04/11/2022

A recent article in Policy Options, the digital magazine of the Institute for Research on Public Policy, made some interesting remarks about why M&A is so hot right now in the Canadian provinces.

The article, entitled “Lack of Competition Blunts Canadian Innovation”, made the point that in many industries, and for many Canadian firms, a general lack of innovation has driven the demand for acquisitions to new heights because it is the most efficient way to grow.

Here are some key points from the article:

The median age of the top 15 largest publicly traded Canadian firms is 122 years versus 45 years in the United States. The median founding year for Canada’s largest firms is 1899 – before the turn of the 20th century. And, according to an OECD report, Canada has the highest number of older firms among 15 other developed countries.

Older firms tend to rest on their laurels, having little incentive to innovate. They spend less on research and development, and instead Canadian companies acquire growth through mergers and acquisitions.

Canada careened out of 2021 on a historic merger boom, with a record $359 billion worth of announced deals and more than 3,857 deals (the busiest year on record). And the boom is expected to continue in 2022.

Now whether you agree with the premise of the article or not, you can’t argue with the fact that 2021 was a record year for M&A activity in Canada and, most likely, 2022 will follow in its footsteps. 

If you are a Canadian business prepping to enter the market soon, or a business already in the market, 2022 could be a significant opportunity to find an optimal buyer (and create an optimal deal) for you. Even if you are not in either of these two categories, you should keep all your options open and be working now on building a buyer ready business even if your exit timing is five years out (or more).

Generational is a leading full-service investment banking firm focusing solely on helping owners of privately held companies in North America build successful firms, find buyers for them, and then provide wealth management services post-transaction. Here is some information on each of our key teams providing those services:

• Generational Consulting Group
• Generational Equity
• Generational Capital Markets
• Generational Wealth Advisors

You can see we are able to take a company from the early stages of contemplating an exit all the way through the exit journey and even post-exit, to help you protect and grow your newfound liquidity.

So, if you are an owner of a Canadian business, you need to contact us to learn more about our services and how you can participate in one of the strongest seller’s markets in Canadian history.

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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