This month’s issue of the monthly executive brief providing M&A market insight for C-level management and their professional advisors.
Second quarter Canadian M&A stats are in – and they show more life than the first quarter. The average reported deal size is up 23% from $51 million in Q1 to $62.9 million in Q2. The past 91 days showed 627 deals valuing a total of $38.9 billion. Of these deals, only ten were over $1 billion, with the majority of Canadian M&A action occurring in the middle market. Interestingly, there has been an increased concentration of mid-market deal activity in Ontario and Alberta over the past 3 quarters. Together, these two provinces accounted for 79% of national activity by volume and 83% by value in Q2 2013.
Despite these encouraging stats, this has been the quietest second quarter since 2010 and activity has not yet met expectations. Many are nervous about economic conditions. Some companies have experienced sharp, unexpected revenue decreases in the first half of 2013, sending buyers retreating back into their shells.
The third quarter holds a lot of promise. Conditions are still ripe for a sharp increase in M&A activity. In Ontario, private equity firms are sitting on half a trillion dollars that’s looking for a home and must be invested. Corporate balance sheets are for the most part healthy and lenders are willing to finance acquisitions. With the Loblaws/Shoppers deal putting $12.4 billion on the table already, it’s looking good that the Q3 stats will prove more than reasonable.
For more information contact:
Douglas Nix, CA | Vice Chairman CFA
905 845 4340 ext. 211