Government-aligned sectors and wealth transfer are expected to fuel transactions as diligence deepens, report reveals
Canada’s mergers and acquisitions market is finding its footing again after two years of volatility, with momentum building behind home grown dealmaking and strategic plays in priority industries.
PwC’s newly released 2026 Canadian M&A Outlook reports that activity levelled out through 2025, with 642 deals with a total value of $138.8 billion, announced between July 1 and September 30, 2025. [NOTE: This is an updated figure from PwC Canada]
READ: How the Trump administration supercharged M&A activity
“It’s encouraging to see the Canadian M&A market moving in a positive direction, with dealmakers demonstrating renewed confidence,” says Sean Rowe, National Deals Market and Value Creation Leader at PwC Canada. “The consistency of transactions reflects a market that is not only resilient but also strategically focused on value creation. As we look ahead, the scale of deals and the momentum in local transactions signal a strong foundation for growth and innovation across key sectors in 2026.”
Domestic buyers take the lead
One of the most notable shifts is the rise of Canadian-on-Canadian deals which now represent roughly half of total transactions, and PwC expects domestic capital to continue anchoring the marketplace into 2026.
But economic uncertainty remains a headwind with real GDP contracting 1.6% annualized in Q2 2025 and forecast to grow below 1% through 2026, with unemployment hovering near 7%. Strategic consolidation remains a priority.
Michael Dobner, National Leader of Economics and Policy Practice at PwC Canada, noted: “We’re seeing dealmakers sharply focused on acquiring new capabilities that not only tackle today’s challenges but also build lasting value.”
Where the deals will happen
The federal budget in November 2025 mapped clear areas of government-supported opportunity: defence, energy, critical minerals, AI and housing. And with Ottawa signalling commitment, private investors appear ready to follow.
PwC estimates more than $1 trillion in capital will flow into Canada’s defence industrial base over the coming decade, including $81 billion already allocated in Budget 2025. Modernization needs, from equipment to supply chain expansion, are projected to ignite dealmaking across aerospace, infrastructure, technology, and adjacent sectors.
As government aims to rely less on foreign suppliers, Canadian firms are expected to accelerate capability-acquisition through M&A, with growing interest in European markets offering compatible defence readiness.
Canada is making sovereignty over digital infrastructure a strategic priority with federal funding between 2024 and 2025 of more than $2.9 billion targeting compute capacity, data infrastructure, and innovation.
PwC expects a surge in M&A activity, joint ventures, and consortiums across the AI stack with data centres, cybersecurity, semiconductors and energy systems supporting advanced computing.
Wealth management tops the deal charts
The industry most visibly feeling structural change is wealth management.
PwC highlights a looming $3 trillion transfer of wealth and business assets as aging founders and Canadians pass control to the next generation. Combined with advisor retirements, tighter margins and rising service expectations, scale is becoming mandatory.
The report underscores an acceleration of M&A focused on expanding advisor capacity and modernizing integrated advice offerings. Major 2025 transactions included traditional financial institutions, insurers and private-equity-backed aggregators seeking national reach.
Across industries, PwC notes that more robust diligence, valuation tension and flexible pricing tools like earn-outs may continue to lengthen deal timelines into next year. But the “wait-and-see” mindset is fading, replaced by what the firm describes as a pragmatic focus on value creation, particularly where transformation aligns with national priorities.
As 2026 begins, the Canadian M&A market isn’t sprinting, but it is moving with purpose, especially where private capital and public strategy meet.
