M&A update: 1 in 3 Canadian firms plan major acquisitions

Mergers and acquisitions (M&As) may pose a growing challenge to HR professionals this year as Canadian dealmaking gears up for a stronger 2026.

One‑third of business leaders are planning major acquisitions amid a more favourable economic and policy environment, according to new research from KPMG Canada.

In a survey of 252 business leaders across 14 sectors, 33% say they intend to make a major acquisition within the next 18 months to capture growth opportunities. Among private or private equity‑backed companies, 36% report plans to pursue an acquisition.

KPMG links the expected pickup in M&A to the federal government’s nation‑building strategy, large‑scale infrastructure spending, steady interest rates and a more optimistic business outlook.

“The government’s nation‑building agenda will be a catalyst for M&A activity in 2026, especially in the private mid‑market, where deal appetite returned in the latter half of 2025 after the shock of the U.S. trade war wore off,” says Marco Tomassetti, President of KPMG Corporate Finance Inc. Canada, which KPMG notes was the No. 1 M&A adviser in 2025, according to LSEG.

“The steady outlook for interest rates will keep capital affordable and accessible, which is positive for financing deals,” he says. “Higher confidence among investors – underpinned by stabilised and, in many sectors, improving margins – and an acceleration of the great wealth transfer will mobilise more strategic and financial buyers such as private equity this year.”

More M&A deals may be coming in the next few years, according to a previous KPMG study.

Massive infrastructure spend and sector hotspots

According to KPMG, Ottawa’s nation‑building strategy includes $115.2 billion in infrastructure spending over the next five years, including $54 billion for core public assets such as transit and artificial intelligence (AI)‑enabled digital infrastructure. The federal government expects this to help generate more than $1 trillion in total private‑sector investment.

Tomassetti says this wave of public and private capital is expected to drive M&A across infrastructure, energy, critical minerals, defence and housing as investors seek scale, capabilities and capacity. Accelerating investment in AI‑enabled digital infrastructure – from data centres and cloud capacity to power and connectivity – will also spur spin‑off deals as companies position along the AI value chain.

“Companies operating in construction and engineering, building materials and logistics, oil and gas services, advanced manufacturing and robotics and business services will see consolidation this year as firms in these sectors seek capabilities and capacity expansion to service demand,” Tomassetti says. “This Canada‑first investment agenda combined with both favourable macroeconomic conditions for deals will create a dynamic environment for M&A.”

Domestic dealmaking and succession‑led activity

KPMG also expects 2026 to be a strong year for domestic transactions as Canada pursues a more competitive and self‑sufficient economic agenda. “Canada’s economic agenda is creating a pipeline of opportunity for domestic dealmakers that demands scale and sophistication,” says Neil Blair, Partner and National Leader of KPMG Canada’s Deal Advisory practice. Investments in infrastructure, energy, critical minerals and business services will require bigger companies to execute complex projects, he says.

“This dynamic will make smaller, specialised firms highly attractive acquisition targets, while pushing larger players to scale up to meet the demands of major projects,” Blair adds. “This is in addition to continued succession‑led M&A and significant dry powder sitting with private equity funds and family offices across North America.”

Blair says buyers and sellers that can identify the right opportunities at the right time and act with confidence will benefit most. “For buyers, timing is critical,” he says. “In a competitive market, disciplined dealmakers look beyond short‑term fluctuations and focus on fundamentals – strong leadership, clear growth trajectories, and operational resilience.” Sellers, he adds, should focus on preparation and momentum rather than trying to time the peak, because “buyers pay a premium for businesses that are performing well and still have room to grow.”

Core HR risks in a busier M&A market

HR firm Milestone underlines that the human resources issues in M&As are complex and can directly affect whether a deal succeeds. It identifies several recurring challenges:

• Communication and uncertainty are at the top of the list. Poor or delayed communication fuels anxiety, lowers morale and productivity, and increases the risk of rumours. HR must keep communication open, transparent and frequent, clearly explaining what is happening, why, and how it affects employees.

• Thorough HR due diligence is essential to understand workforce costs, contractual liabilities, employment risks and cultural compatibility before closing a deal, so problems can be managed proactively rather than surfacing as surprises post‑merger.

• Cultural integration is another major pressure point. When two different workplace cultures collide, morale and productivity can suffer. HR is responsible for assessing culture, designing integration plans and using initiatives such as workshops and joint programmes to build a shared, collaborative culture.

• Retention of key talent is also critical. High performers and critical specialists may feel insecure or be targeted by competitors looking to exploit the disruption. Milestone recommends structured retention strategies, such as incentives and clear career paths, to keep essential people through and beyond the transition.

• Aligning HR policies and systems is another significant task. HR must harmonise benefits, payroll systems, performance management processes and communication protocols across both entities, often using an HR M&A “playbook” to ensure consistent, fair treatment.

• Finally, restructuring and layoffs are often unavoidable when overlapping roles are identified. HR has to plan and manage redundancies or redeployments in a way that balances business goals with empathy, clear communication and protection of the employer brand.

When it comes to M&As, it is often the intangible elements – culture, ways of working and people experience – that determine whether the deal ultimately succeeds or quietly bleeds value in the years that follow, according to Ben James, head of people transformation at Nine.