Opportunities ahead for dealmakers as they shape the post-pandemic economy
By many indications, the coming year looks like it will be a busy one for mergers and acquisitions (M&A), both globally and here in Canada.
As we all continue to navigate the effects of the COVID-19 pandemic and move towards economic recovery, consolidation may be inevitable for companies facing imminent distress. This year, we expect to see opportunistic buying and selling, particularly within sectors that have been deeply impacted by the pandemic. While Canadian M&A total deal value was down in 2020 when compared to 2019, total deal volume was up, and we saw a promising resumption of higher value deals in the last quarter.
Headwinds remain, but the prognosis for dealmaking in 2021 is marked by opportunity and transformation—and we could even see fierce competition for some companies. For many organizations, dealmaking may be the best, and fastest, way to get access to the skills, resources and technology they’ll need to create value in the world of tomorrow.
Explore our Canadian industry and market M&A forecast for 2021.
“During the course of the pandemic, it’s been fascinating to see how quickly organizations have moved from defensive tactics to offensive M&A strategies. Deals that were put on hold are coming back to market and net new sellers are taking advantage of the shortage in deal supply and near record high valuations, bringing deal volumes back to pre-pandemic levels. M&A will play a key role in our economic recovery—and in many organizations’ strategies.”
“We’re at a critical juncture in energy, utilities, mining and industrials (EUMI). Over the last year, we’ve seen accelerated progress toward carbon neutrality and an increased focus on environmental, social and governance (ESG) factors. Here in Canada, there will be significant opportunities for those companies that can figure out how they’re going to deal with this transition in a meaningful way—and what they’re going to do with legacy operating assets.”
“When we look at how COVID-19 has affected consumer markets, it’s really a tale of two cities: we’re seeing a huge divergence between, for example, traditional bricks-and-mortar organizations versus those with sophisticated e-commerce platforms and an optimized bricks-and-mortar footprint. What we can say about this sector as a whole is that, going forward, M&A will be coloured by quickly and likely irrevocably changing consumer habits.”
“As we begin to move out of the pandemic, we expect to see a perhaps once-in-a-generation situation: private equity that’s eager to spend and low interest rates that can facilitate that spending. If you’re a private business owner, you may find some great opportunities if you’re prepared to put yourself in the market.”
“Now more than ever, private equity (PE) funds that have invested in deep value creation capabilities have an edge. But this means going beyond traditional cost takeout and thinking creatively about areas like revenue enhancement and strategic repositioning. These funds can bid more competitively for what’s coming to market in the coming year—and are well positioned to create value immediately post-deal and realize superior returns in current fund vintages.”
“We expect the pace of deals in Canada to continue to accelerate into 2021 as we see an increased appetite for both acquisitions and divestitures. M&A can be a tremendously powerful tool to create value, but it’s all about how you execute the opportunity and the level and quality of the information and planning.”