- with Senior Company Executives, HR and Finance and Tax Executives
- with readers working within the Business & Consumer Services and Healthcare industries
Key Takeaways
- Despite 7% fewer transactions, deal value in 2025 increased 90% from the previous year.
- Backlogged opportunities are expected to restart in 2026, supported by complex and creative deal structures.
- The Supreme Court of Canada reaffirmed market practice that merger negotiations are not generally disclosable.
The "Trump bump" many M&A practitioners anticipated for 2025 largely failed to materialize, dampened by tariff uncertainty and geopolitical tensions. We saw first-hand several auction processes terminate in the first half of the year. The data also reflects the slowdown. As of September 30, 2025, there were 1,898 announced Canadian deals compared to 2,048 during the same period in 2024, representing a 7% decline.
Yet beneath the headline reduction in deal volume, a more constructive story has emerged. It is one that supports cautious optimism for the fourth quarter of 2025 and into 2026.
Bigger deals, bolder strategics
Although there were fewer transactions overall, deal value surged. Aggregate Canadian deal value as of September 30, 2025, reached $139 billion, up from $73 billion during the same period in 2024. This represents a 90% increase. Public M&A skewed toward the larger end of the market, with a greater share of transactions exceeding $5 billion and a reduced proportion in the $20 to $100 million range compared to last year.
Strategic buyers led approximately 80% of public M&A activity through September 30, 2025, up from 62% during the same period in 2024. Financial sponsors drove the remainder. Larger corporate acquirers appear better positioned to navigate today's risk environment. This stems from their superior access to financing, as well as stronger balance sheets and brand equity. They also have greater capacity to absorb regulatory and execution risk. These marquee transactions can serve as confidence anchors for the broader market, reinforcing M&A as a disciplined capital allocation strategy for growth and transformation.
Large scale, high value transactions are, however, not without risk and uncertainty. Several material strategic transactions announced in 2025 have been the subject of contests for corporate control, shareholder opposition and regulatory intervention. A number of these issues are explored in our Osler Legal Outlook article.
In this environment, sharp focus, strong conviction and careful execution are required to secure approval and navigate stormy weather between signing and closing.
A potential re-engagement by the middle market
For many smaller and mid-market companies, the question in 2026 will be how long they can afford to remain on the sidelines without engaging in M&A activities. We continue to see evidence of a backlog of paused processes and deferred strategic initiatives.
As conditions stabilize and the perceived risk premia for transacting compresses, those pipelines could reactivate. If this occurs, it has the potential to create a snowball effect as sponsors, lenders and boards regain confidence and conviction in the ability to compete for accretive targets.
Sector dynamics: mining leads, energy and financials strengthen
Sector composition has followed familiar patterns. Mining and metals remain the focal point of public M&A. Seventeen mining transactions accounted for approximately 37% of overall public deal activity as of September 30, 2025. This is an increase from 33% of transactions during the same period in 2024. The oil and gas sector has increased its share to approximately 13% as of September 30, 2025, up from 4% during the same period in 2024. Banking and financial services transactions have similarly increased, representing 15% of transactions as of September 30, 2025, compared with 4% during the same period in 2024. Given the composition of the markets in Canada, transactions in 2026 are not likely to materially deviate from these core sectors.
While the intense fundraising and deal momentum around U.S. AI and technology has not yet migrated north, we expect continued selective cross-border consolidation. Historically, large U.S. acquirers have sought Canadian talent and intellectual property through targeted acquisitions, often as a series of smaller, opportunistic transactions or acqui-hires. We anticipate this pattern will continue as Canadian innovators seek scale and distribution while acquirers pursue capability-building targets.
Creative dealmaking continues
In a constrained IPO environment, market participants across sectors are pursuing non-traditional pathways to liquidity and growth. We continue to see interest in special purpose acquisition company (SPAC) related solutions. In particular, the SPAC market in the U.S. is back, albeit with smaller pools of capital than those from a few years ago.
Other M&A structures are being used, including acqui-hires, corporate carve-outs and spin-offs designed to sharpen portfolio focus and unlock trapped value. These structures will likely remain part of the toolkit as issuers balance valuation, timing and certainty.
Deals are increasingly complex
Deal structures are becoming much more complex and intricate. We are seeing a higher prevalence of rollover equity in transactions to address valuation gaps and align incentives. Bespoke financing arrangements tailored to borrower profiles and sector risk are becoming more prevalent to address market challenges. Structured equity investments by white knights are also being implemented. To maintain coherent corporate strategies, certain issuers are pursuing corporate carve-outs that require careful separation planning and transitional services frameworks.
These transactions all bring with them significant complexities that demand early planning, cross-functional coordination and disciplined execution to preserve value and manage regulatory, tax and operational risk. The integration and coordination of legal advisors, financial advisors, tax advisors and management is critical.
U.S. policy shifts: cross-border implications
Efforts to deregulate and adopt policies and other legal changes designed to reduce burdens on corporate issuers in the U.S. could, if implemented, catalyze M&A activity over the short and medium terms. This could also bubble over into cross-border M&A flows. Areas to watch include adjustments to merger reviews that are intended to streamline approvals, the adoption of changes affecting anti-money laundering and anti-corruption enforcement, and amendments to Delaware corporate law facilitating conflict transactions. Other potential areas for development include the relaxation of environmental regulations, proposals to end quarterly reporting for public companies and measures to reduce U.S. Securities and Exchange Commission enforcement in certain areas, including digital assets.
The net effect for Canadian-U.S. cross-border M&A is uncertain. On the one hand, a broad-based U.S. economic uptick could encourage inbound investment into Canada. Canadian regulatory policy remains comparatively stable. However, the domestic focus on economic sovereignty and national security in response to trade challenges may create certain hurdles for inbound investment in particular sectors. For some companies, expansion into Canada may offer a diversified foothold and relative stability, particularly if Canadian rates continue to trend lower, the currency remains a competitive entry point and financing availability improves.
On the other hand, a more protectionist U.S. posture in sectors deemed critical could hinder Canadian investment into the U.S.
Supreme Court guidance on disclosure of merger discussions
On November 28, 2025, the Supreme Court of Canada released its much-anticipated decision in Lundin Mining Corp. v. Markowich. The split decision provides guidance on the distinction between material facts and material changes under the Ontario Securities Act (the Act) and is likely to result in earlier, pre-emptive disclosure of developments that could be material. From an M&A perspective, the Court emphasized that negotiations and internal deliberations, without more, will not usually amount to a change in the business, operations or capital of the issuer, even if they are material. For example, merger negotiations between potential transaction counterparties that have not yet crystallized into a decision to implement a merger transaction, or ongoing negotiations with regulators as part of a routine and ongoing regulatory approval process would not generally amount to a "change" in the business, operations or capital. These observations are consistent with market practices and assist legal practitioners when making complex disclosure judgments around these types of situations.
Outlook: constructive but selective
Tariff uncertainty, macro-risk and economic volatility are likely to persist. Even so, the market appears to be adjusting to a new risk paradigm.
As larger players continue to transact and demonstrate executable deal paths, we expect backlogged processes to restart and new opportunities to emerge in 2026. Execution will remain paramount. Parties that plan for complexity, align capital and risk early, and tailor structure to sector realities will be best positioned to convert opportunities into closed deals, at value and on time.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
