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The health-care industry led in deal volume growth

Despite a turbulent year, the Canadian mergers and acquisitions market made a strong showing in 2018. Aggregate deal value surged 20 percent over 2017, while transaction volume gained 8 percent, according to PwC’s M&A Year in Review and 2019 Outlook. Fuelling that growth was an abundance of capital, an expanding economy and low unemployment.

Canadian companies also showed a strong appetite for acquisition targets based outside the country. Even with the uncertainty surrounding tariffs, protectionism and the fate of North American Free Trade Agreement, outbound transaction volume from Canadian businesses climbed 17 percent year-over-year.

“Despite geopolitical headwinds, many Canadian dealmakers took a global view when pursuing opportunities in 2018,” Dave Planques, national deals leader at PwC Canada, said in a statement.

Some industries experienced higher growth rates than others. The health-care industry saw an 87-percent rise in deal volume in 2018, partly thanks to the legalization of recreational cannabis. The financial services and technology sectors gained 31 and 29 percent, respectively. 

In 2019, deal activity will remain strong, according to PwC’s 22nd annual Global CEO Survey. Almost 60 percent of chief executives in Canada plan to pursue M&A transactions to drive revenue growth.

The study also explains that while this year brings plenty of uncertainty due to a federal election and the potential for global trade disruptions, capital should be available and accessible to investors, helping keep the M&A market buoyant.

“Large investors still have a lot of money to deploy, and we expect dealmakers to maintain their enthusiasm heading into 2019,” Planques said.

Helping drive growth are fintech firms, which PwC expects to draw suitors such as banks and insurers. Also, with medical cannabis rapidly expanding worldwide, this year will be a crucial one for showing investors a return on capital. Positioned as the industry’s global leaders, Canadian businesses could seek to gain a first-mover advantage abroad.