The federal government’s new spending plans, including $81.8 billion to modernize the military over five years, will revive the pace and value of business deals in Canada. That’s according to PwC Canada’s 2026 Canadian M&A outlook.
Researchers at the “Big Four” accounting and consulting firm say Ottawa’s expected spending on defence, energy, critical minerals, artificial intelligence, and housing will offset some of the economic unease from continued trade tensions with the United States.
In a report published on Wednesday, PwC Canada says the country recorded 642 deals between July 1 and Sept. 30, with a total announced value of $138.8 billion.
“We expect Canadian M&A markets to continue along this trajectory, with transaction volume holding steady through the first half of 2026,” the PwC Canada researchers wrote. “We’re seeing dealmakers taking a measured approach amid ongoing uncertainty around tariffs and geopolitical dynamics.”
“Local deals — transactions where Canadian buyers invest in Canadian targets — are gaining momentum,” they added. “These deals now represent half of all M&A activity in Canada and are expected to continue to anchor the market through 2026.”
Looking back, PwC Canada says both deal volume and deal value peaked on a quarterly basis in 2021, followed by a “swift cooldown” that lingered through 2023, and into 2024.
“Recent quarters show a tendency towards consistent, steady M&A activity, with no dramatic swings,” the researchers wrote. “Significant market uncertainty suggests that many transformative business opportunities in Canada will be driven by government initiatives in the near term.”
Last month, the federal budget laid out plans for $141.4 billion in new spending over five years. This included an additional $81.8 billion over that time to rearm the Canadian military. This spending would push Canada above NATO’s requirement that members spend two per cent of their country’s GDP on defence.
“Our analysis suggests that over the next decade, more than $1 trillion will flow into the defence sector,” PwC Canada wrote. “To better understand the scale of these investments, annual defence spending in 2035 will be 200 per cent of the level of investment seen during the oil and gas boom in Alberta in 2012 and 2013.”
On Tuesday, shares of Brampton, Ont.-based MDA Space (MDA.TO) closed four per cent higher, after the company announced a deal to develop military satellite communications for the Canadian Armed Forces in the Arctic.
“MDA Space has a long history as a trusted mission partner to the Canadian Armed Forces, delivering the advanced technologies and mission outcomes they need to accomplish their critical mandate,” CEO Mike Greenley stated in a news release.