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The Canadians are coming! The Canadians are coming!
Friday, March 30, 2012

Data suggests that Canadian buyers have quietly (or maybe not so quietly) become a force to be reckoned with in the M&A marketplace. According to the PWC Capital Markets Flash/Deals Quarterly, M&A activity in Canada, and outside Canada by Canadian players, was robust in 2011. Nearly $190 billion worth of transactions were announced in 2011, and the number of deals - 3,173 - was an all time high. Valuations were up 22% over 2010.

Canadian buyers were also looking outside their borders more frequently as evidenced by the percentage of domestic (Canadian) targets dropping to 51%; down from as high as 86% in the mid 2000s. In the middle market space, Canadian buyers were even more outward-looking with the percentage of domestic (Canadian) middle market targets dropping to 49%, from as high as 69% in the mid 2000s.

The PWC study also reveals that Canadian buyers were not necessarily bargain shopping in 2011. Deal multiples came in at 9.4x EBITDA. Of course, as the report indicates, multiples varied widely among industries. However, one thing seems clear, Canadian buyers were not shy when it came to loosening the purse strings in 2011.

Will this carry on in 2012? Stay tuned.

What's the BIG deal?

The surge in Canadian deals likely portends a continued rebound in M&A activity, especially in the middle market space, for all of North America. Further, if they haven’t already taken notice, U.S.-based buyers need to appreciate that there is, and likely will continue to be, increased competition for acquisition targets coming from our friends to the North. Finally, U.S.-based companies who have made, or are considering, a decision to put themselves “up for sale” may be served very well by casting their line far to the North. I hear the fishing can be quite good up there.

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