Record number of Canadian businesses looking at deals, despite tough economy

Opportunities exist for strategic, innovative deals

TORONTO, May 11, 2015 /CNW/ - According to EY's latest Canadian Capital Confidence Barometer, confidence in the Canadian economy is down significantly compared to six months earlier. Despite this pessimism, 72% of Canadian businesses reported they're planning at least one deal in the next 12 months – that's up from 24% in October, and the highest since EY's survey launched in 2009.

"Many Canadian companies are to looking to mergers and acquisitions to address challenges in their existing business," says Doug Jenkinson, a partner in EY's Transaction Advisory Services practice. "While Canadian executives aren't overly optimistic about our country's economy, that sentiment isn't holding them back when it comes to looking at deals. Even in Alberta's distressed oilpatch, we're still seeing deals get done, and there are surely opportunities for those companies that are strategic."

According to the survey, 100% of Canadian respondents saw the global economy as either stable or improving. But when looking at our own country's economy, while 57% see it as stable, only 13% thought it was improving.

Pip McCrostie, EY's Global Vice Chair, Transaction Advisory Services, says: "The low price of oil and currency fluctuations are viewed as a challenge, further elevating the need for cost reduction in the short term for many businesses. But this volatility is also driving M&A momentum through increased consolidation and executives searching for growth outside their domestic market."

In Canada, companies report they're looking south for investment opportunities – to the US (as always), but also to South America. Columbia, Chile and Argentina are all in the top five investment destinations, which is consistent with Canada's focus on the natural resources sector.

"Canadian companies are also looking right at home for investment opportunities," says Jenkinson. "For the first time, Canada appears on the top five investment destinations."

Other highlights from the survey include:

• 91% expect to complete more deals than in the prior year
• 88% say their largest deal in the next 12 months will be $250m or less
• 91% are focused on cross border M&A in the next 12 months

"After years of adopting a 'wait-and-see' attitude, Canadians now seem ready to take a rational approach to re-entering the transactions arena," says Jenkinson. "For those that are strategic, pursuing the right opportunities can help them emerge from these tougher economic times stronger, and in a position to thrive."

About the survey
EY's Capital Confidence Barometer is a survey of more than 1,600 senior executives from large companies around the world and across industry sectors. The Barometer's objectives are to gauge corporate confidence in the economic outlook, understand boardroom priorities over the next 12 months and identify the emerging capital practices that will distinguish companies that build competitive advantage as the global economy continues to evolve. This is the twelfth twice-yearly Barometer in the series, which began in November 2009.

About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY is proudly celebrating 150 years in Canada. For more information, please visit ey.com/ca. Follow us on Twitter @EYCanada.

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SOURCE EY (Ernst & Young)

Erika Bennett, [email protected], 403 206 5157; Julie Fournier, [email protected], 514 874 4308; Sasha Anopina, [email protected], 416 943 2637