2026 mid-year Canadian M&A update

Geopolitical shifts are reshaping the Canadian mergers and acquisitions (M&A) landscape, opening a rare window for domestic champions to consolidate and scale. 

With first-half deal activity remaining relatively steady, Canada is emerging as a stable, strategic alternative in a fractured global landscape. Dealmakers who move with conviction will define the next cycle. 

In this mid-year outlook, we examine three sectors defining this shift. In energy, Canadian producers are riding a supply shock while navigating new headwinds. In agrifood, sovereignty and technology are converging into a generational opportunity. And in financial services, foreign exits—especially within the insurance sector—are opening a rare moment for domestic scale.

As we forecasted in our 2026 Canadian M&A outlook, deal volume held firm in the first half of the year, according to our analysis of Capital IQ data. Canadian M&A volumes opened 2026 in line with the run rate set through 2025. In the first quarter of this year, 658 deals were announced. That’s close to the quarterly average of the prior year (653) and just below the level recorded in the fourth quarter of 2025 (671). We saw fluctuations in deal activity in the second quarter of 2026 as many companies assessed the impact of the Iran conflict and higher energy prices. But activity across the first half as a whole was relatively consistent with previous periods. 

The headline activity masks continued movement in the mix. Materials, industrials, and information technology strengthened through 2025 and remained the three most active sectors in the first half of 2026. Together, they accounted for more than a third of all deals. Conversely, financials—which had gained momentum in the second half of 2025—softened in the first half of the year. Real estate transactions, which are primarily being driven by private capital, hovered around 2025 lows but showed signs of early uptick.

Internationally, Canadian deal activity remained heavily oriented toward the US, with more outbound transactions into the US than inbound into Canada. That concentration makes the Canada-United States-Mexico Agreement (CUSMA) renegotiation and broader trade policy considerations key variables shaping deal activity through the second half of 2026. 

Aggregate deal value totalled $64 billion in the first quarter, down from each of the final two quarters of 2025 and below last year’s quarterly average of $97 billion. Average deal size also eased, dipping to roughly $98 million in the opening quarter. By comparison, 2025’s average of roughly $148 million was lifted by a smaller number of sizeable transactions in the materials, energy, utilities, and financials sectors.

As we look ahead to the second half of 2026, our economics and policy specialists are tracking three key questions shaping the M&A environment:

Geopolitical shifts are creating a double effect on Canadian energy M&A. On one hand, they’re making Canadian production more competitive globally, especially when considering the geopolitical risk premium on competing sources. On the other, they’re inducing instability and raising the cost of borrowing.

Several factors continue to anchor the Canadian energy sector, despite the closure of the Strait of Hormuz, significant damage to LNG production in Qatar, and constraints on Russian natural gas flowing into Europe:

• Supply shock tailwinds: The Iran conflict has triggered global energy supply concerns, pushing oil prices episodically to multiyear highs. While this benefits Canadian energy producers, it adds inflationary pressure and could raise borrowing costs for large deals.
• Deeper diligence: Dealmakers are scrutinizing supply chain risks and potential energy-driven macroeconomic shifts.
• Deferred activity: While energy and materials remain attractive due to global scarcity, broader M&A momentum is slowing as investors wait for more geopolitical clarity.
• Ongoing regulatory evolution: The regulation of energy projects and the infrastructure they rely on continues to develop as climate, energy, and infrastructure policy conversations continue. The result: added complexity to cross-border energy dealmaking.

The challenge for dealmakers is to ride the tailwinds while mitigating the headwinds. That balance is a key to success and value creation in this environment.

Within a steady Canadian M&A market, insurance is standing out. Carrier-level activity is at levels not seen in years, driven by foreign insurers reassessing their Canadian operations amid geopolitical and macroeconomic uncertainty. At the same time, domestic carriers face a growing need for scale to compete effectively.

Definity’s acquisition of Travelers Canada and Wawanesa’s acquisition of Everest Insurance Company of Canada illustrate this structural realignment. As geopolitical uncertainty and US political volatility push global carriers to re-evaluate non-core geographies, some now view Canada as a market to monetize rather than defend.

For domestic insurers, especially middle-market carriers, this creates a rare opportunity to build sustainable scale. That scale matters more as insurers navigate softening conditions in the property and casualty (P&C) market, climate-related loss volatility, increasing technology investment demands, and regulatory capital pressures. Acquiring an established foreign platform or book of business can provide additional premiums, distribution channels, underwriting capability, and talent far more efficiently than traditional organic growth.

The window won’t remain open forever. As more foreign carriers review their Canadian positions, the winners will be those with capital readiness, integration discipline, and a clear conviction on where they want to play.

Beyond foreign exits, activity is also being shaped by a broader push toward scale, distribution reach, and capability build-out across the domestic market. Carriers are increasingly evaluating tuck-in acquisitions, broker relationships, and targeted capability plays to strengthen their position in key segments and improve access to customers.

In a cautious deal environment, Canadian insurance stands out as a sector where strategic buyers can still move with purpose and drive value—and where domestic scale will become a lasting competitive advantage.

Across these three sectors, the deals reshaping Canadian markets share a common purpose: reinvention. Energy companies are reinventing portfolios for a new geopolitical reality. Agrifood players are reinventing how value is created, captured, and delivered. Insurers are reinventing their competitive position through scale. They’re also building and earning the trust their stakeholders demand. In a volatile global economy, that trust is a strategic advantage.

Deals are how reinvention happens at speed. Companies can acquire capabilities faster than they can build them. And they can fund new strategies through divestitures of non-core assets. In a market defined by global instability and shifting value pools, the dealmakers who move with conviction won’t just close transactions. They’ll reinvent how they compete.