Canadian M&A seen picking up after hitting nine-year low in 2020

TORONTO • Canadian mergers and acquisitions (M&A) fell to a nine-year low in 2020 as the pandemic put brakes on companies’ growth strategies, but bankers expect the pick-up in deal-making in the fourth quarter to revive activity this year.

The arrival of multiple COVID-19 vaccines in 2021 is expected to improve public confidence in an economic recovery and revive deal- making, say bankers. Market stability and continued access to capital that led to a resurgence in transactions in the second half of the year is expected to continue.

Over US$ 158.7 billion worth of M& A deals were announced in 2020, making it the slowest year since 2011, compared with US$234 billion in the previous year, data from Refinitiv showed.

David Savard, head of M& A at National Bank Financial, said after COVID-19 put everything on pause, the focus shifted to restructuring transactions. “There were a few others that were in the pipeline that ended up going through a bit of a difficult period with some renegotiations due to COVID,” Savard added.

Of the deals announced in 2020, almost US$ 80 billion came in the fourth quarter, the most active fourth quarter in at least five years, according to the data.

CIBC World Markets, Goldman Sachs and RBC took the top three spots in the advisory rankings.

Financials- focused deals led the recovery in 2020, with Intact Financial’s joint agreement to buy British insurance group RSA.

“You’ve certainly seen the asset management sector much more active in the second half of last year and that should continue into this year,” said David Rawlings, CEO for Canada at Jpmorgan Chase & Co.

Emmanuel Pressman, partner at Osler, Hoskin & Harcourt LLP, said businesses are prepared to “reset the M& A button” and re- evaluate growth strategy.

“We’ve seen this glut of M& A activity in the fourth quarter as a result of this reset,” Pressman said, adding there is also a meaningful pipeline of activity across a range of sectors.