More than three-quarters (79 per cent) of Canadian executives believe the global economy is improving — up 24 per cent from October 2013, according to EY's latest Capital Confidence Barometer.
However, companies are still focusing on controlling costs to optimize capital over the next 12 months.
"Canadian executives are much more confident in both the global and Canadian economies than they were just six months ago," said Tony Ianni, transaction advisory services partner at EY. "In fact, they show some of the most confidence in the global economy of all the countries we surveyed."
That confidence means companies are planning on pursuing more mergers and acquisitions activity in the next 12 months, he said.
"Forty-one per cent of Canadian executives expect to pursue an acquisition in the next year, up from 33 per cent in October," said Ianni. "There's also more confidence that the valuation gap between buyers and sellers will contract, which means there's a healthy pipeline of transaction opportunities."
Two-thirds of Canadian companies have up to three deals in their pipeline, and 34 per cent are looking at four or more deals, found the survey of more than 1,600 senior executives from large companies around the world.
Canadian companies are also optimistic about corporate earnings, credit availability and short-term market stability.
"Companies have been — and continue to be — focused internally on optimizing their businesses," said Ianni. "With stronger balance sheets, they're also now more willing to use debt to finance transactions. That will hopefully help us return to a more traditional level of acquisition interest."
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