M&A Trends in Canada: What Buyers and Sellers Should Know in 2026
5 days ago · 7 mins
When it comes to predicting what lies ahead, we’ll start with an important disclaimer: we don’t have a crystal ball, and experience has taught us to be cautious about trying to guess what lies ahead.
Looking back reinforces that point. Going into 2020, we did not predict a pandemic or fully understand what impacts that would have on M&A activity over the following years. In 2022, we did not anticipate wars that would reshape global geopolitics and drive high inflation (among other things). In 2024, we did not anticipate AI starting to be integrated into our daily lives to the degree it has and continues to do. And in 2025, we did not predict we’d have trade and tariff issues to deal with between the US and that the level of friction between countries would have escalated to the point it did.
M&A activity reflects the environment in which businesses operate. So with that context in mind, the following observations focus on what buyers and sellers in Canada’s low-to-mid market should be mindful of as we move into 2026, based not on prediction alone, but on what we are seeing unfold in the market today.
The “Silver Tsunami”? (…more like slow, rolling waves)
For years, the market was predicting a fairly sudden and widespread exit of baby boomer business owners happening between 2020-2030. That scenario has just not materialized in the way it was predicted.
Instead, exits have continued to occur gradually. Many owners who intended to sell three to five years ago chose to delay amid economic volatility, labour challenges, inflation, and geopolitical uncertainty. Some chose to delay due to internal gaps in their business and the feeling that they were not properly prepared to sell and maximize their position. Others simply discovered they were not ready to step away.
Business ownership tends to attract individuals who are deeply invested in what they have built. Particularly in owner-operator businesses, the company is closely tied to identity and purpose. As a result, we see many entrepreneurs who once planned to retire at 65 continue to operate well into their 70s.
Why M&A Activity Is Likely to Accelerate in 2026
Uncertainty hasn’t disappeared, but it has changed.
Interest rates have largely stabilized, and despite ongoing trade and tariff friction, many Canadian businesses proved more resilient in 2025 than expected. After a few years of declining trends in deal activity following 2022, total deal value in Canada increased year-over-year, even though the number of transactions stayed flat or dipped slightly.
Another shift we’re seeing is clarity in historical performance. For a long time, asking buyers to review the last three years of financials meant pulling numbers straight into the 2020–2021 pandemic period. That volatility made it harder for buyers, and their lenders, to get comfortable with what “normal” really looked like.
Today, that’s no longer the case. Buyers can now look back at operating results from 2022 through 2025 and see how a business performed in a more stable, post-pandemic environment. That makes a difference when assessing sustainability, margins, and risk.
For many owners who chose to wait between 2020 and 2025, this improved visibility is one of the main reasons they’re re-engaging with the market.
Capital Remains Abundant and Increasingly Motivated
Private capital levels remain high, and a significant amount of that capital is under pressure to be deployed.
This dynamic is driving competition for quality opportunities, not only “perfect” businesses, but well-run companies with identifiable opportunities for improvement. Buyers are showing greater openness to transactions that require post-acquisition work, particularly when fundamentals are sound.
For sellers, this environment can support strong outcomes. For buyers, it places greater emphasis on preparedness, discipline, and execution clarity.
Cross-Border M&A: More Cautious, More Deliberate
Cross-border activity remains an important component of Canadian M&A, but it has become more selective.
Ongoing geopolitical uncertainty, including only one year into a four-year U.S. presidential term, has led many Canadian investors to prioritize domestic opportunities. We expect this inward focus is likely to continue into 2026.
At the same time, businesses are actively diversifying supply chains and customer bases internationally and considering new markets. As Canadian operators develop deeper relationships with European and other global partners, familiarity between markets increases, which, over time, can naturally lead to cross-border M&A opportunities.
Buyer Advantage: Speed, Judgment and Focus
Right now, buyers who can commit and keep a process moving are at an advantage.
That doesn’t mean skipping steps or rushing decisions. It means knowing where to spend time and where not to. Diligence is taking longer than it used to, largely because lenders and advisors are asking for deeper reviews across every part of a business. What once aimed for completion within 90 days is now often stretching past 120 days.
When a process drags on, problems inevitably creep in. Management gets pulled away from running the business. Small issues that wouldn’t have mattered early on begin to feel bigger. Frustration builds on both sides, and deals that should close end up stalling or falling apart.
Buyers who aren’t as reliant on external financing, or who are comfortable making judgment calls without waiting for perfect information, are able to avoid this. They’re quicker to separate real risk from background noise. Instead of trying to resolve every minor question, they focus on what actually affects value and move forward.
Warren Buffett was once questioned at an annual shareholder meeting about his lack of due diligence on major investments, making reference to his almost $500 Million investment in PetroChina in the early 2000’s. When asked how he could have made this investment based on reading the annual report alone (he confirmed he did no further diligence), he went on to explain that he came to the conclusion the company was worth $100 Billion, and it was currently selling at $35 Billion. He didn’t need to know the exact number to the decimal, he knew the business was worth far more than what the market was pricing it at. Refining the analysis further wouldn’t have changed the decision, it would have just burned time.
That same logic can apply to transactions of any size. Contrary to the old saying “the devil is in the details”, I actually find the biggest risks in a deal usually aren’t buried in the smallest details. They’re found in the fundamentals: the business model, the people running it, and the industry it operates in. Once those are clear, more analysis doesn’t necessarily make a deal safer. In many cases, it just slows it down and causes deal fatigue.
Seller Advantage: Flexibility and Preparation
For sellers, flexibility has become a necessity of selling a business. Rigid expectations around structure or timing can make it significantly harder to get a deal across the finish line.
In the low-to-mid market, tools like vendor take-backs (VTBs) and earnouts are now commonplace – not red flags. In many cases, they can be what allow buyers and sellers to close the gap and move a transaction forward. VTBs are especially common in the low-to-mid market and are commonly required by banks as it shows the sellers have confidence in the transaction and are willing to keep ‘skin in the game’.
The sellers who tend to do best usually start preparing earlier than they expect. Bringing in an advisor ahead of a formal sale gives time to address issues, reduce risk, and present the business properly before buyers are involved.
It also broadens the pool of potential buyers. Many owners can fall into the trap of assuming they know who the buyer will be for their business – i.e. a direct competitor, or someone already in their space. While this can be the case at times, interest often comes from unexpected places, including financial buyers or operators from outside the immediate market.
Effectively preparing and keeping an open mind throughout the process will almost certainly lead to stronger outcomes.
A Measured Outlook for 2026
2026 is likely to reward thoughtful preparation, realistic expectations, and disciplined execution, on both sides of the table.
Buyers who can move efficiently and assess risk clearly will be well-positioned. Sellers who remain flexible and invest in preparation will be better equipped to navigate an evolving market.
At Confederation M&A, our focus is not on predicting what comes next, but on helping buyers and sellers make informed decisions, grounded in experience and clarity. Remember to focus your energy on what you can control.
Jeff MacKenzie, Partner
jeff.mackenzie@confederationgroup.ca
