NEW YORK and TORONTO, Jan. 24, 2019 /CNW/ - A stable domestic economy, relatively low interest rates and a stronger Canadian dollar have Canada's dealmakers optimistic about the M&A outlook for 2019, according to Upward Bound, a new report by Citi in conjunction with Mergermarket.
Survey respondents' confidence in the prospects for Canadian M&A in 2019 translates across all sectors. More than eight in ten (86%) think M&A volume will go up in their particular sector. Respondents also predict a jump in outbound transactions, with 60% saying there will be a significant increase in the number of deals by Canadian buyers abroad. Forty percent expect the volume of domestic M&A deals to go up significantly as well, as acquirers look to take advantage of continued growth in the domestic economy.
Technology has emerged as a clear driver of acquisition appetite, with 42% of survey respondents saying it represented one of the main motivations for their most recent deal — and 40% saying it would be a key factor in their next transaction. While the historically strong Canadian energy sector led by value through Q3 2018, growing activity in the tech sector has dealmakers anticipating a surge in the future. More than a third of respondents thought that tech would eventually overtake energy as the leading sector for deal activity.
"As the survey results suggest, Canada's tech industry is starting to come of age," said Citi's Grant Kernaghan, Managing Director of Canadian Investment Banking. "Successful Canadian start-ups have showcased Canada's rapidly-growing technology capabilities and momentum is building."
Survey participants also indicated that they expect the private equity industry to take up an ever-larger share of the M&A market over the next five years. When asked for the most likely development to take place in Canadian M&A five years from now, more than a third of respondents (36%) said PE buyouts will make up more than 50% of deal volume.
Key findings of this report include:
- 50% of respondents said strong IP was one of their main criteria when evaluating targets, making it the top selection in the survey. Industry consolidation remains a key driver as well, with 42% saying it was one of the central motivations for their most recent deal.
- 34% of respondents said that attractive targets will be less available next year, as the number of buyers increases and the accessibility of deal financing remains straightforward.
- Despite political tensions, the U.S. remains the top foreign destination for transactions among Canadian companies (73%), followed by Western Europe (59%).
Click here to view the full report
Citi, the leading global bank, does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management. In Canada, Citi is the country's most global financial institution with roots dating back to 1919. With an unmatched global reach, the company is uniquely positioned to enable the progress of its clients.
Mergermarket is a business development and market intelligence tool designed specifically for the M&A sector and provides proprietary intelligence and analysis on corporate strategy across the world. With around 200 M&A journalists talking directly to senior executives, dealmakers and other key players in over 60 locations globally, Mergermarket reports on the whole deal life cycle, from mapping out companies' early stage strategic intentions to tracking deals before they develop and providing real-time news on live events, thereby creating a large window of opportunity. Subscribers can also mine for trends, patterns and deal ideas using Mergermarket's comprehensive deals database and regular data-driven editorial analysis and commentary. Visit www.mergermarket.com to learn more.
SOURCE CITIBANK CANADA
For further information: Shawna Van Esch, Vice-President Public Affairs, Citi Canada, Tel: (416) 947-5741, [email protected]; Chrissy Carney, Public Relations Director, Mergermarket, Tel: (646) 378-3118, [email protected]