The federal government\u2019s 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\u2019s according to PwC Canada\u2019s 2026 Canadian M&A outlook.<\/p>\n
Researchers at the \u201cBig Four\u201d 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.<\/p>\n
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.<\/p>\n
\u201cWe expect Canadian M&A markets to continue along this trajectory, with transaction volume holding steady through the first half of 2026,\u201d the PwC Canada researchers wrote. \u201cWe\u2019re seeing dealmakers taking a measured approach amid ongoing uncertainty around tariffs and geopolitical dynamics.\u201d<\/p>\n
\u201cLocal deals \u2014 transactions where Canadian buyers invest in Canadian targets \u2014 are gaining momentum,\u201d they added. \u201cThese deals now represent half of all M&A activity in Canada and are expected to continue to anchor the market through 2026.\u201d<\/p>\n
Looking back, PwC Canada says both deal volume and deal value peaked on a quarterly basis in 2021, followed by a \u201cswift cooldown\u201d that lingered through 2023, and into 2024.<\/p>\n
\u201cRecent quarters show a tendency towards consistent, steady M&A activity, with no dramatic swings,\u201d the researchers wrote. \u201cSignificant market uncertainty suggests that many transformative business opportunities in Canada will be driven by government initiatives in the near term.\u201d<\/p>\n
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\u2019s requirement that members spend two per cent of their country\u2019s GDP on defence.<\/p>\n
\u201cOur analysis suggests that over the next decade, more than $1 trillion will flow into the defence sector,\u201d PwC Canada wrote. \u201cTo 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.\u201d<\/p>\n