Confidence returns to Canada’s M&A landscape heading into 2026

After two slow years for mergers and acquisitions, confidence is returning to Canada’s dealmaking landscape. A stronger equity market, lower rates and easing inflation have helped fuel a rebound, with activity now running well above its 10-year average.

BNN Bloomberg spoke with Deep Khosla, head of Canadian investment banking division at Bank of America, about the surge in cross-border deals, why foreign buyers are targeting Canadian assets and how companies can protect themselves from predatory capital.

Key Takeaways

• Canada’s mergers and acquisitions market has bounced back strongly after two years of weakness.
• Lower interest rates and improving equity valuations have boosted confidence in boardrooms.
• Foreign investment remains high as a weak loonie and strong fundamentals attract global buyers.
• Roughly US$2–3 trillion in private capital remains on the sidelines, ready to fund new deals.
• Canadian firms are urged to stay vigilant and structure deals that preserve domestic control.

Read the full transcript below:

MERELLA: The Canadian M&A market entered 2025 under pressure — tariffs on the horizon, inflation still biting, and the lowest deal count in two decades. But by mid-year, things turned around. Deal-making started to surge. Let’s talk about that with Deep Khosla, head of Canadian investment banking division at Bank of America. Thanks for joining us today.

DEEP: Nice to be here.

MERELLA: When would you say things started to turn around, and what drove that shift?

DEEP: The last couple of years have been pretty quiet. You’re right — the first quarter was marked by a lot of uncertainty, and markets don’t like uncertainty. But when inflation started to come under control, that helped. Debt markets improved, rates came down a bit, which supported equity valuations. When those two things aligned, easier funding gave people more confidence in boardrooms, and that led to more deal activity. It just started to build momentum from there.

MERELLA: Why do you think activity remained slow before that, even after the election in the United States settled some of that uncertainty?

DEEP: Inflation was a big factor. Equity market valuations weren’t great, which is a major driver for buyers. When stock prices are low, companies don’t want to use their shares as currency in a deal. That began to change as markets strengthened.

MERELLA: Are you seeing more activity in certain sectors?

DEEP: Canada has great companies across many industries — not just resources, but also industrials, retail, services and telecom. The activity has been very broad-based this year, which is terrific.

MERELLA: Any sectors standing out?

DEEP: Oil and gas, definitely. Mining as well. Telecom has also been very active, both inbound and outbound. We’ve seen Canadian retailers expand internationally, too. It’s really been a good-news story across the board.

MERELLA: What does foreign investment look like in Canada right now?

DEEP: It’s been incredibly strong, and that’s become a major theme. Our currency remains weak, rates are relatively low, and there’s roughly US$2 trillion to US$3 trillion in private equity capital sitting on the sidelines looking for deals. There’s a lot of interest in Canadian companies — we have things people want. But that also means we need to be vigilant, making sure we attract constructive capital, not predatory money.

MERELLA: Are you noticing certain regions showing more interest in Canada?

DEEP: It’s quite broad-based — we’re seeing interest from the U.S., of course, but also Europe and Asia. It’s really coming from all over.

MERELLA: You mentioned the difference between constructive and predatory capital. Where do you see the biggest risks when it comes to foreign investment?

DEEP: We want decisions about Canadian companies to be made here. It’s good for the economy to have head offices and boardrooms in Canada. We want to maintain control over our economic future. But at the same time, companies need capital to grow. There’s a difference between activist or predatory capital and constructive capital.

That’s where a firm like ours can really help. We have the top-ranked defensive advisory business in both Canada and the U.S., and we help clients structure deals that are better aligned with their long-term goals. A great example is Rogers’ $7-billion investment from Blackstone — a constructive deal that provided helpful capital while ensuring Rogers retained control of its operations.

MERELLA: Are you advising your clients to be more defensive when it comes to investment?

DEEP: Not strictly defensive. There are great opportunities out there. We’re just encouraging clients to stay vigilant and ensure deals are truly in their best interests.

MERELLA: What’s your outlook for M&A activity through the rest of this year and into 2026?

DEEP: We expect continued strength. Globally, M&A activity is already running ahead of the 10-year average. We began the year about 10 per cent below that average, and now we’re nearly 30 per cent above it on a run-rate basis. There’s still US$2 trillion to US$3 trillion of dry powder waiting to be deployed. Rates are constructive, equity valuations are solid, and companies are using stock to finance acquisitions. The fundamentals are there. There’s still some uncertainty, but it’s more at the margins now. Overall, there’s plenty of room for this market to keep running.

MERELLA: And in terms of sectors — oil and gas, mining — will those continue to lead activity?

DEEP: Those will remain active, but we’re also seeing growing interest in technology, AI and healthcare. Canada has strong homegrown players in those spaces, so I expect that trend to continue.

MERELLA: Got it. Appreciate your time today.

DEEP: Thank you, Merella.

MERELLA: That’s Deep Khosla, head of Canadian investment banking division at Bank of America.

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This BNN Bloomberg summary and transcript of the Oct. 7, 2025 interview with Deep Khosla are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.