CANADA LAW AND PRACTICE Contributed by: Kevin West, Andrea Hill, Priya Ratti and Meryam Kellow, SkyLaw
SkyLaw Professional Corporation 22 St. Clair Ave E Suite 200
Toronto Ontario M4T 2S3 Canada Tel: +1 416 759 5299 Email: kevin.west@skylaw.ca Web: www.skylaw.ca
1. Trends 1.1 M&A Market
financing market is robust, with an abundance of creative financing options; private equity firms continue to hold an abundance of cash ready to deploy; valuation gaps have narrowed as acquirors spend longer in due diligence; and the declining value of the Canadian dollar makes Canadian businesses more attractive for US bar - gain hunters. However, since the US tariff war with Canada began in February 2025, business confidence has taken a significant hit, and the valuations of Canadian businesses will be impacted by the risk of a global recession, particularly those busi- nesses that trade with the United States. With a majority of Canadian exports going to the USA, Canadians are uneasy watching the tariff story develop. Though the news and outlook change day to day, it appears that businesses will be taking “wait-and-see” , guarded approach to M&A in early 2025 and deferring transactions until con- fidence has recovered. 1.2 Key Trends M&A activity in Canada was set to improve in 2025 as interest rates fell throughout 2024 and
The outlook for M&A in Canada is uncertain, with tariff wars weighing on investor decisions. At the time of writing in early 2025, the authors believed that a number of factors supported an optimistic climate for deal-making. However, the trade war launched by the United States against Canada in February 2025 and the wide-ranging retaliatory tariffs imposed by the United States on 2 April 2025 resulted in a global stock market crash. There is now a significant risk of both a global recession and higher inflation. These dramatic changes and the resulting uncertainty will impact the level of M&A activity in Canada. Easing interest rates, decreasing inflation and a steady exchange rate against the US dollar throughout 2024 spurred just enough confi - dence for Canadian deal-making to carry on at higher deal values than 2023. After the “soft landing” in 2024, investors were briefly hopeful for an uptick in Canadian M&A in 2025 given the stimulating effects of the lower cost of borrowing on housing activity, house- hold spending and construction. Moreover, the
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