Nine in 10 CEOs of large Canadian organizations are considering making acquisitions in the next three years to help boost growth – with four in 10 planning major deals – and nearly three quarters of small and medium-sized businesses are considering making acquisitions, according to a pair of KPMG surveys.
In KPMG International’s CEO Outlook, a survey of global CEOs, Canadian chief executives cited M&A as their second-most important growth strategy over next three years, just behind organic growth, while CEOs in global markets cited M&A as their top priority – ahead of organic growth.
Among Canadian CEOs, 41 per cent said they are likely to make acquisitions that will significantly impact their operations, 49 per cent are likely to do deals that moderately impact their business and only 9 per cent are unlikely to make an acquisition, said the report.
“By contrast, KPMG in Canada’s Private Enterprise survey showed small- and medium-sized businesses (SMBs) are relying less on M&A as a top growth strategy, but they’re still planning to do deals: 34 per cent are considering significant acquisitions, 43 per cent are expecting to make acquisitions with moderate impact on their organizations, and four per cent are seeking to be acquired,” said KPMG.
John Cho
“Recent interest rate cuts by central banks in Canada and the U.S., and lower inflation are breathing life back into the M&A market. As the cost of capital eases, investors and corporates are becoming more confident about making acquisitions, so we expect to see dealmaking activity pick up; in fact, 2025 could be one of the busiest years for M&A in quite some time,” said John Cho, KPMG in Canada’s National Leader of its Deal Advisory practice.
“As economic headwinds begin to ease, businesses and institutional investors will naturally become more acquisitive. The supply of acquisition targets will likely increase as well, as more private equity funds exit their investments after years of cautiously sitting tight. As the economy starts to improve, more small and mid-sized businesses will be looking for funding to help support their next stage of growth. All these factors point to a busier M&A market.”
For SMBs looking to expand, tapping private capital will be a key strategy, survey data shows: eight in 10 respondents are looking for a long-term investor with patient capital and advice that can help them scale up, and 77 per cent are seeking an investment of 10 years or more, said the report.
Tapping private capital
“Just over three quarters (77 per cent) of SMB respondents are considering or would consider teaming with private-equity investors as long as they don’t load up their balance sheet with debt, and 78 per cent said raising private capital is more important to their growth strategy than the public markets,” said KPMG.
Neil Blair
Neil Blair, partner and President of KPMG in Canada Corporate Finance Inc., said private capital has become an increasingly important source of growth for Canadian organizations over the last few years because the alternative – going public – has become more onerous and complicated, according to Canadian business leaders.
Almost eight in 10 (79 per cent) respondents said the immense and increasing cost of compliance, governance and disclosure requirements makes going public or being a publicly traded company problematic. If the compliance and governance burden could be eased however, three quarters of respondents said they would definitely consider going public.
“Public markets have become more complex and harder to navigate, and many businesses don’t want to deal with that complexity because it can be costly, time-consuming and resource-intensive for many organizations. Private capital is an attractive option for growing businesses, but business owners aren’t just looking for funding – they want true partners who understand and value their vision and purpose. There’s more at stake to doing a deal nowadays.”
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list. He was also named by RETHINK to its global list of Top Retail Experts 2024.
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