M&A deals involving Canadian companies during the first quarter of 2026 are nearly 24 per cent lower than the deal volume from the same period last year.Cole Burston/The Globe and Mail
After the deal-making frenzy that was 2025, Canadian merger and acquisition activity slowed considerably in the first three months of 2026.
Roughly US$51.9-billion worth of M&A deals involving Canadian companies were announced during the first quarter, according to data from LSEG Data & Analytics to be released Friday. That is 23.6 per cent below the deal volume from the same period in 2025 and 16 per cent below the US$61.8-billion first-quarter average over the past 10 years.
Deal-making shrugged off a trade war, among various geopolitical crises, in 2025 to post one of the strongest years for Canadian M&A in recent history. Near the end of last year, experts were predicting that 2026 would be another banner year for the country’s corporate takeover market.
John Emanoilidis, co-head of the M&A practice at Torys LLP, which ranked second among legal advisers for M&A in the first quarter, said the decline that occurred instead “reflects more caution right now than a retreat,” but acknowledged that continuing violent global conflicts are having an impact on the market.
“We have some very significant world events happening right now. The Iran conflict is of course creating uncertainty and volatility, which is never good for M&A,” he said. “We are already seeing higher oil prices feeding into inflation expectations and that creates pressure on interest rates, which affects financings and potentially bid-ask spreads.”
Ryan Avey, Canadian head of M&A at Royal Bank of Canada, which was the top financial adviser for M&A in the quarter, said the sheer size of the largest deals that took place in the first three months of 2025 “reflects a skewed comparison.”
Mr. Avey said that during the first quarter of last year, the sale of Nova Chemicals Corp., Innergex Renewable Energy Inc. and Veren Inc. totalled approximately $40-billion. By comparison, the top three deals from the first quarter of this year – Boralex Inc., CoolIT Systems Inc. and Allied Gold Corp. – were worth about half that level, or roughly $20-billion.
“More tellingly, deal count is actually up,” Mr. Avey said, citing year-to-date data from RBC showing 65 transactions taking place in 2026 so far, compared with 52 during the same period in 2025.
The LSEG data paint a starkly different picture, citing a total of 616 deals taking place between early January and late March, compared with 945 during the first quarter of 2025. It not a strictly apples-to-apples comparison, however, as RBC filters out deals worth less than US$20-million and LSEG includes all deals regardless of size.
“For now, it is in some cases taking longer for some transactions to cross the finish line to an announced deal,” Mr. Emanoilidis said. “It is having an impact on due diligence and that and other reasons are stretching deal timelines.”
Meanwhile, the corporate borrowing binge that has defined much of the past two years of fundraising activity continued to accelerate into 2026. Canadian businesses issued approximately $25.1-billion in corporate bonds during the first quarter, up 6.7 per cent from the same period in 2025 and nearly 43 per cent above the $17.5-billion first-quarter average over the past 10 years.
“The market is a little bit more discerning in this environment,” said Rob Brown, co-head of Canadian debt capital markets at RBC, the top investment bank for debt issuances in the first quarter. “While conditions are still reasonably good and the underlying foundation is reasonably strong, you really are looking for the green lights in order to proceed with a transaction.
“When those windows do materialize, we tend to see a lot of issuers jumping into the market together to capitalize on that relative stability,” Mr. Brown said.
Another metric that is continuing to gain momentum is the long-moribund market for stock sales. Canadian public companies issued a combined $7.4-billion in new shares during the first quarter, an increase of more than 88 per cent on a year-over-year basis.
While that total is still below the $8.5-billion first-quarter average over the past 10 years, it is nonetheless a sharp rebound from the generational lows of the equity issuance market from as recently as mid-2024.
“It has not just recovered, it has been very active,” said Peter Miller, co-head of global equity capital markets at Bank of Montreal, the top investment bank for stock sales in the first quarter. “It has been more earnings driven versus just multiple expansion, which is healthy.”
As for whether the M&A market will recover in the months ahead, Mr. Emanoilidis said much depends on how much longer the conflict in Iran and across the Middle East persists.
“We are optimistic, but of course if the current situation is prolonged and that has effects on inflation and financing, you would expect that to have a moderating effect on M&A,” he said.
“Last year, despite the macroeconomic turbulence that we saw with tariffs, we saw a very significant rebound in the second half of the year, so we are optimistic that 2026 is still going to produce a strong year of deal-making.”