Defence, sovereign AI, and wealth management poised for significant activity: PwC's 2026 M&A Outlook
- 642 deals with a total value of $138.8 billion, announced between July 1 and September 30, 2025.
- More than $1 trillion expected to flow into defence sector in the next 10 years, with over $81 billion from the 2025 federal budget.
- Local deals account for half of all M&A activity in Canada and are expected to continue anchoring the market through 2026.
- $3 trillion in expected wealth transfer is fueling M&A in wealth management industry.
TORONTO, Dec. 10, 2025 /CNW/ - After navigating a challenging period, the Canadian mergers and acquisitions (M&A) market is gaining more stable footing, as detailed in PwC's 2026 Canadian M&A Outlook. Following a cooldown that persisted through 2023 and 2024, the market saw steadier deal flow in 2025, signaling a pragmatic optimism. Between July 1 and September 30, 2025, Canada saw 642 deals with an announced value of $138.8 billion. This trajectory is expected to continue with steadier volume through the first half of 2026, driven by a clear focus on value creation and supported by deeper diligence processes.
"It's encouraging to see the Canadian M&A market moving in a positive direction, with dealmakers demonstrating renewed confidence," said Sean Rowe, National Deals Market and Value Creation Leader at PwC Canada. "The consistency of transactions reflects a market that is not only resilient but also strategically focused on value creation. As we look ahead, the scale of deals and the momentum in local transactions signal a strong foundation for growth and innovation across key sectors in 2026."
Despite Canada's economic growth remaining challenged with an expected growth below 1% through 2026, M&A activity is proving resilient. With inflation at 2% and unemployment around 7%, businesses are recognizing that strategic mergers and acquisitions are essential to navigate these conditions, secure future growth, and drive innovation.
"In a period of slower economic growth and persistent high financing costs, Canadian businesses are making strategic M&A a priority," said Michael Dobner, National Leader of Economics and Policy Practice at PwC Canada. "We're seeing dealmakers sharply focused on acquiring new capabilities that not only tackle today's challenges but also build lasting value, especially in key sectors such as defence, mining and AI, which are being supported by government initiatives."
Despite ongoing uncertainty surrounding tariffs and geopolitical dynamics, local deals and transactions where Canadian buyers invest in Canadian targets, are gaining momentum. These deals represent half of all M&A activity in Canada and are expected to continue to anchor the market through 2026.
"The activity in local deals suggests that the Federal Government initiatives are resonating and investors are following the government's call to invest in our domestic market," added Dobner. "Canadian buyers investing in Canada highlight a significant trend: leveraging our relative economic advantages and fulfilling commitments to our allies by adopting state-of-the-art technology. This trajectory sets the stage for stronger economic growth--barring any major negative global events--towards the end of 2026 and beyond, which in turn will fuel M&A activity in other sectors."
As Canada moves forward, the M&A market is positioned for continued strategic growth. Dealmakers are not just reacting to changes but actively shaping the future, using mergers and acquisitions to capture new opportunities and build stronger, more innovative businesses. This proactive approach ensures the market remains dynamic, driving value creation and adapting to the evolving economic landscape.
Key takeaways from the 2026 Canadian M&A Outlook:
- Government-driven sectoral shifts: The federal budget released in November 2025 outlined key priorities, including defence, energy, critical minerals, AI, and housing. These government commitments are anticipated to spur M&A transactions as businesses align with these strategic areas.
- Massive defence investments: Over the next decade, more than $1 trillion is projected to flow into Canada's defence sector, with $81 billion allocated in the 2025 federal budget. This significant investment is setting the stage for M&A as Canadian companies look to acquire new capabilities and build defence readiness, increasingly with a focus on European markets with comparable NATO capabilities.
- Accelerating sovereign AI: Canada's commitment to sovereign AI is creating a surge in M&A activity and joint ventures. Over $2.9 billion in federal investments announced between 2024 and 2025 are fueling efforts across the AI technology stack to enhance digital independence.
- Wealth shift: The transfer of an estimated $3 trillion in wealth and business assets from aging Canadians to the next generation, is actively driving M&A in wealth management, as firms aim to grow and offer more holistic services.
The report emphasizes that 2026 will be a time of transition, where creative and opportunistic dealmakers can capitalize on new domains of growth, with trusted collaboration between the government and private sector playing a key role in realizing these opportunities.
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About PwC Canada
At PwC Canada, we help clients build trust and reinvent so they can turn complexity into competitive advantage. We're a tech-forward, people-empowered network with more than 6,500 partners and staff in offices across the country. Across audit and assurance, tax and legal, deals and consulting, we help build, accelerate and sustain momentum.
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SOURCE PwC Management Services LP
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