78% of Canadian executives intend to actively pursue deals
Canada was identified as the third top investment destination in the world by global respondents of the 18th bi-annual EY Capital Confidence Barometer.
“Canada is breaking records this year,” says Doug Jenkinson, a Partner in EY Canada’s Strategy and Transactions practice. “The world is taking notice of recent positive economic developments and turning to Canada as the third top investment destination — the highest ranking we’ve seen since the survey began in 2009. It’s not just global sentiment that’s reaching a new high. The number of Canadian executives intending to pursue acquisitions continues to climb.”
The survey finds 78% of Canadian executives intend to actively pursue deals in the next 12 months as a key avenue for growth and a way to streamline businesses. This shows a much higher appetite than 54% of US and 52% of global respondents who plan to do the same.
On top of that, deal pipelines are robust. The survey finds 73% of Canadian executives expect their M&A pipeline to increase in the next year — a 40% jump in the last 6 months.
Part of this resurgence can be credited to higher activity in the mining and metals, financial services and consumer products and retail sectors. Also fuelling intentions is Canadians’ strengthening optimism in local and global economies.
- 86% of Canadian executives see the local economy improving
- 87% of Canadian executives see the global economy improving
Despite this overall optimism, potential changes to NAFTA looms on the minds of Canadian executives. Almost half (49%) list uncertainty around trade policy and protectionism as the greatest threat to the growth of their business.
Uncertainty south of the border does not seem to be impacting earnings expectations. Sixty-six percent of Canadian respondents have stable confidence in corporate earnings – compared to only 33% just 6 months ago.
“Positive economic outlooks, tied with high appetite for transactions and the growing attractiveness of the Canadian market means competition for assets will intensify,” says Jenkinson. “In order to be competitive, executives will need to focus on their core areas for growth. Having the right due diligence measures in place will mean companies can execute plans quickly and at an accretive valuation.”
Access more Canadian highlights from the latest EY Capital Confidence Barometer.
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