Canada’s mergers and acquisitions market is showing signs of renewed stability after several subdued years, with steadier deal flow in 2025 expected to carry into the first half of 2026, according to a new outlook from PwC Canada.
The firm’s 2026 Canadian M&A Outlook points to sustained transaction activity driven by a focus on value creation, deeper due diligence and strategic acquisitions, even as broader economic growth remains constrained.
PwC said 642 deals with an announced value of $138.8 billion were recorded between July 1 and Sept. 30, 2025, reflecting what it described as a more consistent level of activity following a downturn that extended through 2023 and 2024. The firm expects that level of consistency to continue into 2026.
“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.”
Economic backdrop shapes dealmaking
PwC’s outlook places the M&A rebound against a challenging economic backdrop. The firm noted that Canada’s economic growth is expected to remain below one per cent through 2026, while inflation is holding at about two per cent and unemployment is around seven per cent.
Despite those conditions, PwC said dealmaking has proven resilient as companies look to mergers and acquisitions as a way to secure future growth, strengthen capabilities and support 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.”
The report describes 2025 as a year of pragmatic optimism, with buyers and sellers adjusting expectations and pursuing transactions that align closely with long-term strategic goals rather than short-term expansion.
Local transactions anchor the market
A significant share of current and expected deal activity is coming from transactions involving Canadian buyers and Canadian targets, PwC said. Local deals account for roughly half of all M&A activity in the country and are expected to continue anchoring the market through 2026.
PwC said this trend is emerging despite ongoing uncertainty related to tariffs and broader geopolitical dynamics.
“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,” Dobner said. “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.”
The firm’s outlook suggests domestic transactions are providing a measure of stability for the market, as companies prioritize familiarity with regulatory environments, supply chains and customer bases.
Government priorities influence sector focus
PwC said federal government priorities outlined in the November 2025 budget are shaping where dealmakers are focusing their attention. The budget identified defence, energy, critical minerals, artificial intelligence and housing as key strategic areas.
According to the report, these policy signals are expected to spur M&A activity as businesses seek to align with areas targeted for public investment and long-term growth.
One of the most significant areas highlighted is defence. PwC said more than $1 trillion is projected to flow into Canada’s defence sector over the next decade, including $81 billion allocated in the 2025 federal budget. The firm said this level of investment is expected to encourage acquisitions as Canadian companies look to expand capabilities and enhance defence readiness.
The outlook also points to increasing interest in European markets with comparable NATO capabilities as part of that defence-related deal activity.
Sovereign AI and wealth management drive transactions
Artificial intelligence is another sector PwC identified as a growing source of M&A activity. The firm said Canada’s push toward sovereign AI is contributing to a rise in acquisitions and joint ventures across the AI technology stack.
PwC noted that more than $2.9 billion in federal investments announced between 2024 and 2025 are supporting efforts to strengthen domestic digital capabilities and independence, which in turn is influencing dealmaking strategies.
Wealth management is also expected to see continued consolidation. PwC said the anticipated transfer of about $3 trillion in wealth and business assets from older Canadians to the next generation is driving firms to pursue acquisitions aimed at expanding scale and offering broader services.
The firm said this generational shift is prompting wealth managers to reposition their businesses through M&A to capture new growth opportunities and adapt to changing client needs.
Transition year ahead
PwC’s report characterizes 2026 as a transitional period for the Canadian M&A market, marked by selective but purposeful dealmaking. The firm said creative and opportunistic buyers are likely to find opportunities in emerging and government-supported sectors, particularly where collaboration between the public and private sectors plays a role.
As dealmakers continue to adjust to economic constraints and shifting policy priorities, PwC said mergers and acquisitions remain a key tool for shaping business strategies rather than simply reacting to market conditions.
The firm said this approach is expected to keep the Canadian M&A market active and adaptable as companies pursue growth, innovation and long-term value creation heading into 2026.
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