Strategic M&A will be the fastest way to business transformation

PwC 2023 Canadian M&A Outlook shows that 54% of Canadian corporate leaders are not planning to delay deals in 2023

  • Within the private company space, deals in energy, utilities, mining and industrials have been a consistent favorite, taking the top spot in 2022 and 2021 in terms of deal value with tech, media and telecommunications slipping behind.
  • While the energy, utilities and mining sectors saw deal volumes and values declining in 2022, deal activity remains robust in certain subsectors, including critical and battery minerals and renewable energy.
  • Given the resilience of most financial services businesses, we expect continued M&A activity from the larger financial institutions.

TORONTO, March 8, 2023 /CNW/ – While economic and geopolitical uncertainties have created headwinds, they’re also generating opportunities for the Canadian mergers and acquisitions market. According to PwC Canada’s M&A year in review and 2023 outlook, last year’s activities continued to be in line with historical norms. However, this year, a reset in valuations, the availability of capital and increased competitiveness from corporates should help create openings for dealmakers.

PwCs 26th Annual Global CEO Survey illustrates that while 76% of Canadian corporate leaders are pessimistic about global economic growth, 54% aren’t planning to delay deals in 2023 to mitigate potential economic challenges and volatility. The survey results further show that a significant number of both global CEOs (39%) and Canadian respondents (25%) believe that their company will no longer be economically viable a decade from now, if they continue on their current path.

Strategic M&A as the fastest way forward

Whether organizations are changing supply chains, adopting new go-to-market approaches or adding capabilities, businesses must quickly reinvent themselves to remain relevant. The need for speed in business transformation will continue to keep dealmaking front and centre. The fastest way therefore to transform a business is going to be through strategic M&A, divestiture or other deals.

“In the Private company space, mergers and acquisitions are still robust. Buyers may find opportunities in struggling sub sectors or in the sale of non-core assets from corporates looking to refocus their strategy on core operations. For owners contemplating selling, sooner may be better than later, as the sale of a business often takes several months and we’re in a volatile market with several unknowns that may affect their business valuation,” Christine Pouliot, Partner, Deals Private Leader, PwC Canada.

Key actions for dealmakers

“While M&A tends to slow during periods of uncertainty, those are often the times when M&A and transformational deals become increasingly compelling. We expect the current market will provide accretive opportunities for both strategic and sponsor led M&A plays similar to what we experienced post 2008,” says Domenic Marino, National Deals Leader for PwC Canada.

Making M&A transactions happen will become increasingly difficult with growing misgivings of boards, investment committees and other stakeholders, in tandem with the rising macroeconomic risks and recessionary headwinds.

Given greater investor scrutiny, dealmakers will need to take creative approaches, to convince boards, investment committees and other stakeholders about new investment opportunities including building the transformation into the narrative, accelerating strategic reviews and portfolio optimization, using lower valuations as a catalyst and prioritizing a robust workforce strategy, especially given talent shortages and wage inflation pressures.

Making M&A a priority for transformational success

As business leaders look to surmount various challenges, M&A will be a key tool to help reposition their businesses, bolster growth and achieve sustained outcomes. Companies that have strategic discipline and conviction will be able to find and execute good deals that create shareholder value in the current business environment.

C-suite leaders need to have a plan not only to carry out the deal but to make sure it delivers on a transformation promise. Despite the headwinds, the opportunities will be there for savvy dealmakers in 2023 and beyond.

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SOURCE PwC Management Services LP

For further information: Chiara Battaglia, Manager, Public Relations, PwC Canada. 514-833-3337 | [email protected]

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