November 30, 2023

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Spotlight: an introduction to M&A in Canada

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Overview of M&A activity

Canada saw 954 M&A deals announced in 2021 valued at US$141 billion overall. These results represent the highest aggregate deal value since 2007 and the highest deal volume on record for the first half of 2021. M&A activity in Canada continued on an upward trend observed during the fourth quarter of 2020, with an aggregate deal value of US$88.3 billion on 515 deals, representing 63 per cent of the total deal value for 2021.2 For the first half of 2022, M&A activity in Canada was highly impacted by the global economic and geopolitical uncertainty, with the number of deals, in the first half of 2022, decreasing slightly to 456 from 515 compared to the corresponding period in 2021, and aggregate deal value plummeting by 51 per cent from US$88.3 billion in 2021 to US$43 billion in 2022.3

The two most active sectors by deal count in 2021 were, for a fourth year in a row, the technology, media and telecom (TMT), and energy, mining and utilities (EMU) industries. TMT had 240 deals announced during the year for US$44.08 billion, including Score Media and Gaming Inc’s acquisition by Penn National Gaming, Inc for US$2 billion. EMU was the most active sector by deal value with a market-leading US$43.9 billion on 122 deals for the third most active sector on volume, owing in part to the nature and composition of Canada’s capital markets with the Toronto Stock Exchange and the TSX Venture Exchange being home to more mining companies than any other market in the world.4 Standout transactions include Brookfield’s successful takeover bid for Inter Pipeline Ltd for approximately C$15 billion, Newcrest Mining’s acquisition of Pretium Resources for C$3.5 billion and Centrica and Direct Energy on the sale of Direct Energy to US-based NRG Energy Inc for US$3.625 billion. TMT and EMU represent 62 per cent share of the total deal value. The industrial and chemicals sector was the second most active sector with 163 deals announced for an aggregate deal value of US$16.8 billion.5

The Canadian private equity market continues to be a key driver of M&A activity in 2021. Aggregate deal value was C$30.4 billion, which represents an increase of 14 per cent in dollar terms compared to 2020 levels, but still far from 2019’s high of C$39.6 billion.6 Deal volume experienced a 49 per cent surge to 616 from 413 deals in 2020; the number of deals completed in 2021 represents the highest volume on record for a single year.7 Funds continue to fundraise actively, building on ever-increasing dry powder, and the market across Canada remains highly competitive, attracting interest from domestic and international investors. In 2021, the activity level in almost all sectors continued on their positive trends with marked increase in the healthcare, information technology and B2B sectors. Notable transactions included Hg Capital in its recapitalisation of Intelerad Holdings ULC through a growth investment from TA Associates and CVC Capital Partners in its definitive agreement to acquire a majority interest iExamWorks. Measured by total investment amount, the financial services, information technology and B2B sectors were the hot sectors.8 Both the deal value and the number of Canadian private equity exits in 2021 increased. Firms exited 117 companies for a total value of C$26 billion, representing a year-over-year increase of 108 per cent in total activity and 44 per cent increase in total value.9