Canada may lead in global M&A

Though many parts of the capital markets are very slow, a consistent theme from Canadian investment bankers is that the pipeline of pending mergers here is pretty full.

Truth be told, bankers almost always say that. But the numbers back it up at the moment.

On Friday, figures from Thomson Reuters showed that the value of M&A involving at least one Canadian company is up 22 per cent so far this year.

Now, a global survey from accounting firm Grant Thornton International showed that Canadian companies are among the most likely to grow by mergers and acquisitions.

The survey polled 12,000 businesses in 40 countries. It found that 42 per cent of Canadian companies are planning to expand by buying or combining with another company.

That's ahead of the 37 per cent in the U.S. and way ahead of countries like Germany and France. The global average was 34 per cent. Only Brazil, at 40 per cent, came close to Canada's number.

The main rationale for the Canadian companies to deals were access to new markets, adding scale, and tacking on lower cost operations. Almost three quarters are looking at domestic deals, while a quarter are looking beyond Canada.

Companies are also not depending on the rocky equity markets for cash. About two-thirds said they will finance expansion from retained earnings, and 55 per cent said they would use bank loans.

The full report lives here.