According to a year-end report on M&A Trends published by Deloitte, corporate and private equity executives surveyed in the last quarter of 2016 anticipated significant M&A activity in 2017. Indeed, three quarters of survey respondents expect deal activity to increase in 2017 relative to 2016, and almost 65% expect deal size to increase. Aside from strategic reasons, the expected increase in the pace and size of transactions may be linked to high stock prices, continued low interest rates, and availability of cash held in reserve by large companies.
In the Canadian context, the Deloitte report suggests that U.S.-based investors are looking at M&A opportunities abroad, with Canada ranking first among foreign markets, particularly among corporate respondents. Forty percent of respondents to the Deloitte survey cited Canada as a target market, with the UK (31%), China (25%), Japan (34%) and Europe (22%) lagging behind.
U.S. interest in Canadian-based businesses may be attributed, at least in part, to the enthusiasm shown by the survey respondents for M&A transactions in the energy and resources sector. In that category alone, more than half of respondents identified Canada as the geographic region where deals were anticipated.
Increased acquisition interest from abroad naturally means opportunity for strategic review and the potential divestiture of Canadian businesses. Canadian business owners and executives looking to capitalize on the expected trend should consider how best to position themselves for success in 2017.
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