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Canada's Q3 deal market, plus how to weigh financing growth against a sale.
Tariffs have forced many Canadian business owners to focus on protecting margins, customers and cash flow. But defence should not be the entire strategy. An equally important question is where the next stage of growth will come from and who is best positioned to pursue it.
Canada already has trade agreements providing access to markets beyond the United States. On September 1, the United Kingdom began applying the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with Canada, alongside the existing Canada–UK trade agreement. This is not an automatic source of new customers, but it creates another route to assess.
This does not mean abandoning profitable U.S. business. Diversification should begin with evidence of demand and a realistic assessment of shipping, regulation, currency exposure, customer support and working capital. An agreement may improve trading terms; it cannot, by itself, create an attractive business case.
For an established private company, the opportunity may lie in expanding distribution, adding capacity or acquiring a complementary business. Each path has a different capital requirement, and may lead to a different ownership decision.
Building a presence in a new market offers control, but requires time, local knowledge and investment before results are assured. A distributor or joint-venture partner may provide faster access, although the owner gives up some control over customer relationships and economics.
An acquisition may be the fastest route to scale. Buying an established distributor, competitor or complementary operator can add customers, capabilities and local expertise immediately. It also introduces purchase-price, integration and financing risks. The central test is whether the expected cash flow justifies the capital committed.
Owners sometimes assume that a major growth initiative requires selling equity. Not necessarily. Senior or subordinated debt may fund an acquisition or expansion while allowing existing shareholders to retain ownership. The right structure depends on sustainable cash flow, current leverage, available security and the lender’s assessment of risk.
The key is to model the complete funding requirement and not just the acquisition price or equipment cost. Include working capital, integration spending and contingency, then test debt service under a slower-growth scenario. The objective is sufficient financing with room to operate, not the maximum amount a lender might advance.
The same opportunity may be more valuable in another owner’s hands. A strategic buyer with established international distribution, complementary products or deeper capital resources may be positioned to develop the business more quickly than its founder can independently.
That makes a sale worth evaluating even when the company is performing well. The comparison should consider realistic sale proceeds, the owner’s willingness to assume additional debt and risk, the time required to execute the growth plan, and personal objectives. A buyer’s potential synergies do not automatically translate into a premium for the seller.
The decision is not simply whether to expand or exit. It is whether to build, partner, acquire, finance or sell and how each choice affects long-term value. Before committing to the next stage, establish what the business can prudently borrow and what a credible buyer might pay. Those two numbers can materially change the decision.
For more insights and advice on growing or selling your business.
Over the trailing 12 months, IT and materials dominated Canadian deal volume — 77 and 73 transactions respectively, together claiming nearly half of all activity. In contrast, deal value tells a different story. Energy generated roughly $66 billion (CAD), much of which reflects a handful of large transactions, the five largest account for nearly 90%, while materials contributed nearly $60 billion. Industrials (41 deals) and health care (35) rounded out the busy end of the quarter.
The lesson for owners: your sector’s deal count doesn’t necessarily predict its dollar weight. Sector totals are driven by a few large transactions and say little about any one company’s value.
Ontario remains Canada’s deal engine, accounting for 134 of 324 trailing 12-month transactions — 41% of all activity. BC (62), Québec (56) and Alberta (47) form the next tier, and together the top four provinces were home to 92% of deals.
Three Q3 transactions stand out. Alimak Group acquired Pro-Bel Group, a privately owned Ontario business, at an enterprise value of $200 million, including deferred consideration. Ecolab acquired Alberta’s CoolIT Systems for $6.5 billion and Brookfield and La Caisse completed their take-private of Québec’s Boralex.
Strategic buyers, domestic and foreign, remained active acquirers of Canadian businesses.
IG Private Company Advisory provides strategic and transaction advisory services for transaction sizes of $10 million and up. Discover how we can help unlock your company's potential.
David Turnbull — Head of IG Private Company Advisory — leads a team with decades of experience across many industries. His team has access to an extensive global network of strategic and financial business buyers and capital providers. This helps business owners navigate growth, capital decisions and transactions with institutional-quality M&A, corporate finance and strategic advice.
Data source – Capital IQ
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