Canadian execs to take break from M&A

By Staff | November 13, 2018 | Last updated on November 13, 2018
2 min read

Despite a positive economic outlook, most Canadian executives plan to take a break from pursuing mergers and acquisitions in the next 12 months, a survey from EY says.

Most of those surveyed are optimistic about the Canadian and global economies, the survey says. Executives are also confident that corporate earnings, stocks and the availability of credit will improve in the next 12 months. Most also expect the domestic M&A market (81%) and the global M&A market (95%) to improve.

Despite the optimism, only 46% said they intend to actively pursue M&A activity in the next 12 months, a drop from 80% in the last survey.

Unrealized synergies from recent transactions may be the reason for the disconnect, the survey says. More than half (53%) of those surveyed had recently been involved in deals where they didn’t achieve the synergies identified at the time of the deal. Most of those surveyed (80%) said synergies were worth 20% to 40% of the total value of the deal.

“Realizing synergies and optimizing integration can mean the difference between a good and a bad deal,” said Doug Jenkinson, partner in EY Canada’s transaction advisory services practice, in a release.

Executives said they would start the integration process earlier and set aggressive targets to achieve the full value of synergies.

Regulatory, geopolitical and policy uncertainty from the new North American trade deal (the USMCA), Brexit and the threat of trade wars are also reasons why executives won’t pursue M&A activity.

Instead executives are going to focus on investing in existing operations and in their staff, the survey says.

Read the report here.

Advisor.ca staff

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.