No Match Found
Canadian deal activity in the engineering and construction space continued to improve in the third quarter of 2019 with 14 deals closing during that period compared to 11 in Q2 2019. This also represents a meaningful increase from last year, when only 10 deals closed in the quarter. This quarter, we saw two deals close with financial buyers. The remainder of the deal activity was led by private buyers consolidating their service offerings.
A notable transaction was the acquisition by Hatch Ltd. of Upside Engineering Ltd., a Calgary-based engineering service provider to the oil and gas sector, for an undisclosed amount. This quarter also saw a unique transaction that combined engineering and construction with cannabis. The deal involved Veritas Pharma Inc., a public pharmaceutical company, selling its stake in 3 Carbon Extractions Inc., a designer of cannabis extraction facilities, to a financial buyer. As the cannabis sector continues to experience disruption, we expect to observe more transactions in this area.
Globally, deal value in Q3 2019 continued the declining trend the sector has experienced throughout this year, falling 29% in comparison to Q2 2019 and representing a similar decrease over Q3 2018. But from a volume perspective, Q3 2019 activity increased 8% in comparison to Q2 2019 and almost 9% over Q3 2018. In Canada, we expect the consolidation wave to continue, potentially creating a more competitive environment between private buyers and giving sellers favourable exit opportunities.
“Canadian deal activity experienced another strong quarter, with Canadian strategic players seeking to selectively acquire targets with specialized competencies.”
Deal value in Q3 2019, declined by 29% to $16.3 billion over Q2 2019. Deal value for YTD 2019 also declined by 8% to $62.7 billion when compared to YTD 2018.
In Q3 2019, the deal volume grew by 8% to 644 deals vis-à-vis Q2 2019, but in YTD 2019 the deal volume declined by 5% to 1,829 deals when compared with YTD 2018.
Average deal size in Q3 2019 decreased by 29% to $75.1 million, when compared to Q2 2019. Similarly in YTD 2019 the average deal size declined slightly by 3% to $98 billion when compared with YTD 2018.