Are we going to see more M&A activity in 2016?
Canadian executives may be moving more towards M&As in 2016 than they have in previous years, says one new survey.
New research from EY’s Canadian Capital Confidence Barometer finds that nearly three-quarters (73%) of execs have M&A plans for the next year, compared to only 24% in October 2014.
“Canada is bullish in its pursuit of acquisitions,” said Doug Jenkinson, EY’s Transaction Advisory Services Partner, in a statement. “M&A outlook is also positive in the U.S., where 74% of companies are planning on making deals this year — the highest out of all countries surveyed. We’re seeing a very healthy market overall.”
According to the survey, Canadian eagerness for M&A is supported by a higher optimism about the domestic economy. In fact, 38% of respondents see the Canadian economy improving, compared to just 13% in April 2015. This optimism is reflected in the steady growth of deal pipelines, with almost 90% of Canadian respondents looking at more than one M&A opportunity at once. This is almost double from April 2015.
The Canadian market is becoming the focus of Canadian M&A activity, as 66% of companies are investing in domestic deals in the coming year. Part of the explanation for this may lie in the tumultuous commodity markets, which have impacted the flow of capital. There are signs that the Canadian oil and gas industry will see an increase in transactions in the coming year as players address balance sheet pressure. Globally, 90% of oil and gas executives expect the M&A market to accelerate in the next 12 months — a sharp increase from 50% of respondents a year ago.
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