After two years marked by caution, the Canadian mergers and acquisitions market is entering a new phase. Deal activity is rebounding despite ongoing commercial and geopolitical uncertainty, and transactions are becoming more targeted and more structured. In this environment, understanding the true value of a business is becoming just as critical as timing the sale.
According to PwC, M&A activity normalized in 2025, and this trend is expected to continue into the first half of 2026. Recent data confirms this return to balance. Between July and September 2025, 642 transactions were announced in Canada, representing a total value of nearly $139 billion.
This new phase is also characterized by tighter deal discipline. Negotiations are more formalized, due diligence processes are more rigorous, and risk‑sharing mechanisms are increasingly common. Pricing structures are more flexible, while transaction timelines are often longer.
Acquiring Companies Come Out Ahead
In this more disciplined market, a key question arises: do these transactions truly create value for the companies involved? On this point, data from the Business Development Bank of Canada (BDC) is clear.
According to a recent study, companies that pursue acquisitions tend to outperform. Five years after completing a transaction, acquiring SMEs report profits that are four times higher than those relying solely on organic growth. While the year of acquisition is often accompanied by a temporary decline in profitability, the medium‑term gains are very real provided the transaction is well planned and rigorously integrated.
The BDC estimates that nearly $300 billion worth of business transfers are expected to take place in Canada over the coming years. Approximately one in five Canadian companies will change hands within the next five years, even as the number of potential buyers exceeds the number of sellers. Preparation therefore becomes a critical success factor, both to secure the transaction and to maximize its benefits.
When the Transaction Also Hinges on Valuation
While the market promises significant economic opportunities, negotiations must still be grounded in solid fundamentals. And that starts with a simple yet decisive question: what is the business really worth?
For many business owners, the answer is far from obvious, notes Mathieu Valcourt, Partner and Co‑Head of Business Valuation for Greater Montreal at RCGT. He discussed this issue in https://www.ec2finance.com/balado/evaluation-dentreprise-mythes-conseils-et-tendances-balado-ec2-ep-62/.
According to Valcourt, many entrepreneurs tend to estimate the value of their business based on difficult‑to‑quantify factors: years of personal effort, their central role within the organization, or the reputation they have built in their market. “After spending 20 or 30 years building a company, it’s natural to attach emotional value to it,” he explains. The challenge arises when this perceived value diverges too far from what the market is willing to recognize.
“The role of the valuator is to remove the rose‑coloured glasses before the entrepreneur enters the market,” Valcourt summarizes. Without a realistic understanding of value, a business owner may dismiss otherwise sound offers simply because they do not align with initial expectations.
Beyond Valuation: The Importance of Comprehensive Preparation
However, valuation is only one piece of the puzzle. For Louis Blain, CPA, Partner at EC2, a successful transaction also depends on broader preparation that goes well beyond the company’s financials.
“Business owners also need a solid personal financial plan,” he emphasizes. “The proceeds from the sale must support their long‑term lifestyle. It’s equally important to think through the transition into retirement, as this can directly influence negotiation decisions.”
Another key risk is losing focus on day‑to‑day operations during the transaction process. “Too often, entrepreneurs become so absorbed in the deal that operational performance suffers,” Blain warns. Any deviation from expected results can raise concerns among buyers and lenders, complicating the closing of the transaction.
This is where proper advisory support becomes essential. “At EC2, we gather the documentation required for due diligence early in the process, which helps structure key issues and avoid surprises,” he explains. The team acts as a true quarterback coordinating all stakeholders and ensuring everyone works from reliable, shared information. This alignment is a critical factor in reducing friction during communications and negotiations.
Considering an acquisition, a sale, or a business transfer?
In an increasingly structured and demanding market, EC2 supports business leaders by clarifying issues, structuring the process, and guiding them toward achieving their objectives both professionally and personally.
