One-half of Canadian execs pursuing M&As this year: Survey

U.S., China top investment destinations
||Last Updated: 05/09/2012

Canadian executives are hungry for mergers and acquisitions, with 48 per cent expecting to pursue an acquisition in the next 12 months, according to a recent survey by Ernst & Young. That's up from 32 per cent in April 2011.

That surge of confidence bucks the global statistics with only 31 per cent of respondents around the world and 34 per cent of United States respondents expecting to do the same, found the Global Capital Confidence Barometer which surveyed 1,500 senior executives around the world.

"In Canada, confidence in the local economy has more than doubled," said Tony Ianni, a partner in Ernst & Young's transaction advisory services practice. "While there is still volatility and corporate executives are still cautious, their outlook is more positive than many global respondents who operate in a more challenging environment."

Of the Canadian participants surveyed:

•thirty-one per cent are looking to divest

•eighty per cent believe the number of deal opportunities is increasing

•seventy-six per cent believe the likelihood of closing deals is greater than it was six months ago

•seventy-five per cent view credit availability as stable or improving

•seventy-two per cent believe the eurozone crisis has affected their business.

While Canadian corporate executives are in a more confident frame of mind, particularly compared to the rest of the world, they are still fundamentally cautious. Persistent market volatility, austerity measures, the eurozone crisis and potential slowing of growth in emerging markets have continued to fuel conservatism, said Ianni.

"The findings indicate that most Canadian executives feel the eurozone crisis has had a negative impact on their business," he said. "A lot of the caution we're seeing from these executives stems from the fact that they do business with other less stable economies; but they still believe there are deal opportunities, especially in emerging markets."

However, with most of the ingredients now in place for a favourable M&A environment in Canada — plentiful cash reserves, adequate credit availability and rising economic confidence — deal opportunities are increasing, and the quality of potential targets continues to improve, said Ernst & Young.

As for acquisitions outside of their local marketplace, Canadian respondents' top investment destinations include the U.S., China, Hong Kong, Singapore and India. They identify financial services, life sciences (including health care), consumer products, oil and gas, and technology as the most active in acquisitions, found the survey.

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