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2026 Canadian M&A outlook
Value creation set to drive dealmaking
After experiencing peak highs for both quarterly deal volume and deal value during 2021, followed by a swift cooldown that lingered through 2023 and into 2024, the Canadian mergers and acquisitions (M&A) market reached more stable footing in 2025. Recent quarters show a tendency toward consistent, steady M&A activity, with no dramatic swings.
In the period from July 1 to September 30, 2025, there were 642 deals in Canada with a total announced value of $138.8 billion, according to our analysis of CapitalIQ data. We expect Canadian M&A markets to continue along this trajectory, with transaction volume holding steady through the first half of 2026.
We’re seeing dealmakers taking a measured approach amid ongoing uncertainty around tariffs and geopolitical dynamics. Yet, local deals—transactions where Canadian buyers invest in Canadian targets—are gaining momentum. These deals represent half of all M&A activity in Canada and are expected to continue to anchor the market through 2026.
Canadian deal volume and value by quarter
*Anticipated Q4 figures are estimated based on the October to November run rate. Actual results may differ.
Looking ahead, value creation will be top of mind for Canadian dealmakers as they adapt to an uncertain M&A landscape. Geopolitical uncertainty and demographic shifts will continue to shape market dynamics. Government commitment towards investing in bold infrastructure initiatives and priority sectors such as defence—combined with disruptive technologies like AI, agentic AI, and quantum—will also push Canadian businesses to explore reinvention to create value.
In this edition of our annual Canadian M&A outlook, we discuss key trends and themes that we’re seeing in the Canadian M&A market and explore how they are setting the stage for creative and opportunistic dealmakers to capitalize on new domains of growth.
Looking ahead—a sectoral shift in dealmaking
Canada's economic outlook remains challenged. In the third quarter of 2025, real GDP was 2.6% (annualized) according to Statistics Canada—which fully offset the decline seen in the second quarter. However, Statistics Canada's preliminary estimate of negative growth in October—combined with concerns about declining full time jobs, especially in sectors vulnerable to trade uncertainty—suggests to us that average GDP growth for the next few quarters will be challenged to exceed 1.0% on an annual basis.
Given the challenging economic conditions, inflation is expected to hover around 2%, while unemployment will likely remain relatively high at approximately 7% throughout the remainder of 2025 and into 2026. This combination of factors is expected to prompt the Bank of Canada to continue cutting its key policy rate to between 2% and 1.75%. However, we don’t anticipate a corresponding decline in long-term government bond yields as global bond investors are increasingly concerned about government debt and deficits—meaning little relief in longer term financing costs.
The economic outlook is particularly cloudy for companies in the industrial manufacturing and automotive sectors. Our Tariff Impact Survey revealed that 24% of respondents from these sectors believe the economic viability of their business could be two years or less, while 42% suggest it could be less than ten years. These companies recognize that speed is critical for shifting this trajectory as lack of scale or an inability to pivot could lead to financial distress or significant erosion of business value. As a part of their response, 34% say they plan to pursue M&A—whether selling or buying—and partnerships.
The significant market uncertainty suggests that many transformative business opportunities in Canada will be driven by government initiatives in the near term. The federal budget released in November 2025 highlighted the government’s key priorities—defence, energy, critical minerals, artificial intelligence, and housing—along with investments to support them. The scale of these commitments is expected to spur private sector investments and transactions in these priority areas, as well as among organizations in other industries looking to reinvent their business with speed by pivoting towards them or their supply chains.
Spotlight on defence—building defence readiness
Our analysis suggests that over the next decade more than $1 trillion will flow into the defence sector. Over $81 billion was allocated to defence in the 2025 federal budget. Modernizing and growing Canada’s defence capabilities will require investment across the defence ecosystem—from upgrading equipment and constructing new facilities to recruiting and supporting personnel. These investments are expected to create strong tailwinds not only for aerospace and vehicle manufacturers, but also for players in infrastructure, technology, apparel, equipment, food services, and many other sectors.
To understand the scale of these investments better, annual defence spending in 2035 will be 200% of the level of investment seen during the oil and gas boom in Alberta in 2012 and 2013. According to the Alberta government’s 2013 Annual Alberta Labour Market Review, the oil and gas boom generated approximately 115,000 jobs each year and attracted talent from coast to coast to coast to Alberta. Doubling that level of investment as part of accelerating Canada’s defence readiness will likely entail a significant degree of dealmaking to drive outcomes and desired capabilities.
While the government is committed to significant defence spending over the next decade, one major challenge will be the readiness of the Canadian private sector industrial base to meet national defence needs and the growing supply requirements of the armed forces. Historically, existing Canadian defence companies have pursued many of their market opportunities south of the border, while private and institutional fund-backed companies have largely avoided the defence sector, driven by concerns over public perception and potential ESG implications.
This raises a critical question: how can Canada fulfil its commitments without relying heavily on traditional partners south of the border? The answer will, in part, require a sweeping reinvention of multiple sectors of the Canadian economy to build defence readiness—an evolution poised to ignite significant M&A activity in the years ahead.
Driving such significant changes will take a combination of investment, collaboration, and incentives. Government incentive programs tend to mirror government priorities. Looking forward, new incentives will likely target initiatives that raise productivity and automation, advance sustainability, and support market diversification. Defence sits at the intersection of these themes.
As the M&A market adjusts to capture these opportunities, access to government incentives—embedded within potential targets or available to finance post‑acquisition projects—will help accelerate deal business cases, support valuations, and act as a catalyst for transaction activity.
Entering 2026, we anticipate an increase in M&A activity as Canadian companies race to acquire defence readiness capabilities or components thereof. These acquisitions won’t focus on the traditional US market. Instead, expect a pivot towards European markets or others with comparable NATO capabilities.
Success will hinge on speed—identifying, securing, and integrating desired capabilities across entire portfolios to respond to emerging needs. In moments like these—significant moments of industry transformation—the stakes are high. The winners will be well positioned to capture more than their fair share of the market.
Spotlight on sovereign AI—establishing sovereign technology capabilities
In Canada, sovereign AI is emerging as a cornerstone of national economic and security strategy, fueling a multibillion-dollar wave of state-backed investment across the AI technology stack. Today, many parts of the stack—comprised of data centers, compute technologies (e.g., chips, quantum), telecommunications networks, AI models, and applications—are primarily provided by foreign owned multinationals.
To date, the Canadian government has announced $2 billion in investment in 2024, and $925 million in the 2025 federal budget, for sovereign public AI infrastructure. The focus of these investments has been on compute technologies, digital infrastructure, AI platforms and R&D. Provincially, we have also seen initiatives in Quebec, Alberta, and Ontario to build enabling infrastructure and encourage adoption by small and medium-sized businesses.
In 2026, we anticipate that there will be greater clarity on the scope of Canada’s digital sovereignty ambitions, driven by national security, economic competitiveness, and data privacy needs. Global models offer useful examples. In the US, the CHIPS Act anchors a strategy that supports local champions like NVIDIA and OpenAI, while accelerating private sector infrastructure that supports national AI needs. Other countries, including China, have a state directed approach aimed at localizing the entire AI stack—from hardware and cloud platforms to foundation models and chips—following a dual-circulation architecture focused on self-reliance and consumption. We expect that Canada will adopt a hybrid model—where some components are under local control while others are acquired through international and private sector collaboration.
We have seen examples of private sector participation by the large telcos and cloud providers, who have established AI infrastructure like data centers, telecommunication networks, technology platforms, and cloud solutions.
We anticipate a surge in M&A activity, joint ventures, and consortiums targeting key use cases across the technology stack that underpin the delivery of trusted and responsible sovereign AI capabilities. We also anticipate increased levels of M&A activity in enabling areas such as cybersecurity, energy and power management, data storage, semiconductors, and cooling and thermal innovation.
Canada is late to establish its sovereign ambitions when compared to some other advanced economies. In a world where nationalistic agendas are increasing barriers and where AI is becoming a cornerstone of national prosperity, we anticipate significant and accelerated investments by both the private and public sectors to build AI ecosystems.
Spotlight on wealth management—momentum meets a mandate for scale
Aging and succession challenges in family-run enterprises suggest a massive wave of business sales and transitions over the next decade in Canada. In its Succession Tsunami report, the Canadian Federation of Independent Business estimates that over $2 trillion in business assets could be transferred by 2033 because of owner exits. According to CPA Canada, an additional $1 trillion in wealth is expected to transfer from baby boomers over the next five years.
These succession trends are creating powerful tailwinds for the Canadian wealth management industry, propelled by this once-in-a-lifetime intergenerational wealth transfer combined with the untapped potential of the under-advised mass affluent and high net worth market segments. Yet, alongside these opportunities, the industry faces mounting challenges—from pressure on rate grids from lower cost alternatives and margin compression from rising technology and regulatory costs to clients demanding fully integrated ‘one stop’ wealth advisory solutions. The wealth management industry is also juggling the question of succession planning as aging advisors look to retire.
As a result of these factors, 2025 saw a record level of M&A activity in the wealth management industry. Deals involved a diverse range of buyers, including traditional financial institutions, insurance brokers, and core strategics. iA’s acquisition of Richardson Wealth has created one of the largest national independent wealth management platforms in the country. OneDigital’s acquisition of PWL signals a convergence of the retirement benefits and wealth spaces into a holistic workplace-to-household advisory model.
Financial sponsors also remain focused on the sector, likely aiming to replicate successes seen in the US registered investment advisor (RIA) market. One example of this is Kelso & Co’s minority investment in the rapidly growing Wellington Altus, which has $40 billion in assets under management, and was valued at $1.5 billion.
Demand for wealth management assets in Canada remains strong, fueled by a growing financial wealth market and two structural shifts reshaping market dynamics. First, next-generation inheritors are increasingly fee-conscious and open to alternatives—such as hybrid and self-directed models—making personalization and accessibility critical differentiators. Second, independents are capturing market share by delivering a holistic value proposition—including services like planning, tax, estate, insurance, and private markets—powered by tech-enabled advisors and multidisciplinary teams.
The wealth management sector offers strong organic growth opportunities. These can be accelerated through targeted M&A focused on expanding advisor capacity, creating best-in-class product shelves, and rapidly modernizing client engagement.
Looking ahead to 2026, we anticipate continued—and possibly accelerated—M&A activity across wealth management verticals. Acquirers from both direct and adjacent verticals will actively pursue scale and capability building. We also expect ongoing sponsor backed aggregation, strategic cross border combinations, and banks and insurers selectively buying distribution to fast track time-to-capability.
For forward thinking players, scale will be a means, not an end. Dealmakers will prioritize driving sustainable organic growth and capitalizing on a once-in-a-lifetime intergenerational wealth transfer. They’ll also be working to reshape wealth advice to be future ready—such as by using unified data to drive a more connected client experience, gaining more control over distribution (and possibly asset manufacturing) to defend margins, and embedding capabilities to build holistic offerings.
A time of transition. A time of opportunity.
Despite ongoing economic and geopolitical uncertainty, we anticipate Canadian M&A in the first half of 2026 will reflect a steady normalization. Dealmakers are moving forward with cautious optimism, sustaining a consistent volume of deal flow. However, increased scrutiny and deeper due diligence—combined with negotiations around pricing mechanisms such as earn-outs and flexible consideration structures—are expected to continue extending deal timelines.
The ‘wait-and-see’ mentality that characterized the first half of 2025 is fading as we close out the year, replaced by a pragmatic focus on creating value in this new normal—except there’s nothing normal about it. With economic and demographic shifts reshaping Canada’s economy, opportunities are emerging across key sectors, from wealth management and defence to sovereign AI and beyond. Trusted collaboration between the government and the private sector will play a key factor in the size and breadth of these opportunities.
We anticipate 2026 will be a time of transition as companies look to create value and gain new momentum—whether by preparing for sale through carve-outs, separations, and cost optimization; refocusing on growth and scale to meet exit plans; acquiring capabilities to address future needs; or pivoting to capture emerging areas of growth.
Interested in learning more about how to use M&A to your organization’s best advantage?
Get in touch with us today to start the conversation.
Deals are an opportunity – for faster growth, stronger capabilities and dramatic transformation
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National Leader of Economics & Policy Practice, PwC Canada
Tel: +1 416 520 5859
Canada Industrial Manufacturing and Automotive Deals Leader, PwC Canada
Tel: +1 514 205 3976
