2 minute read 23 May 2019
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Survey tracks a decade of Canadian dealmaking, points to a strong 2019

By

Doug Jenkinson

EY Canada Transaction Advisory Services

Extensive M&A and divestiture experience both within North America and globally in a variety of industries. Specializing in extractive industries and foreign investment into emerging markets.

2 minute read 23 May 2019

76% of Canadian respondents expect to pursue M&A in the next 12 months, the second highest in survey history.

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The 20th edition of the EY Global Capital Confidence Barometer marks a decade of tracking Canadian corporate confidence and dealmaking — from the wake of the global financial crisis and the relative quiet of the early 2010s, through catching the global M&A wave in 2013 and 2014, to then enduring resource economy choppiness in 2016. Today, the survey indicates that 76% of Canadian respondents expect to pursue M&A in the next 12 months, the second-highest ever (behind April 2018) and the fifth consecutive year above the historical average of 50%.

Chart showing responses to query "Do you expect your company to actively pursue M&A in the next 12 months?"

Despite attention-grabbing headlines forecasting economic pessimism or even recession, Canadian executives are bullish on the economy overall. On the domestic front, 92% of Canadian respondents see the local economy improving, compared with only 54% from our survey 24 months ago. Similarly, 93% see the global economy improving, compared with 53% when we asked 24 months ago. Canadian respondents are also confident we will see improvements in corporate earnings, credit availability and the stock market over the next 12 months.

Revenue growth

78%

of Canadian respondents are targeting revenue growth greater than 10% in the next year compared to 55% globally.

Canadian executives are focused on growth, with more than 78% targeting revenue growth greater than 10% in the coming year. This is a strong indicator of a positive economy, but more important are the metrics demonstrating the desire to keep businesses competitive and resilient amid disruption. The top two capital allocation and strategy issues cited by Canadian executives include making a transformational investment in digital and technology, and restructuring and improving existing operations. Workforce trends also signal growth, with only 4% looking to reduce headcount and 30% considering investment in AI, automation and technology to increase workforce productivity.

Chart showing responses to query "What are the main strategic drivers for pursuing acquisitions?"

The impact of increased economic and political uncertainty is the most prominent item on boardroom agendas over the next six months, so caution and discipline remain key. For now, with 2019 continuing to be a strong year for dealmaking, Canadian executives are focused on becoming smarter, stronger and focused on evaluating all aspects of their capital agenda.

Illustration of flags to show the top five investment destinations: 1. United States, 2. Canada, 3. United Kingdom, 4. China, 5. Germany

Summary

The EY Global Capital Confidence Barometer (pdf) gauges corporate confidence in the economic outlook and identifies boardroom trends and practices in the way companies manage their Capital Agendas.

About this article

By

Doug Jenkinson

EY Canada Transaction Advisory Services

Extensive M&A and divestiture experience both within North America and globally in a variety of industries. Specializing in extractive industries and foreign investment into emerging markets.