Choppy Waters - How U.S. Tariffs Reshape the Canadian M&A Lands

In today’s volatile global economy, few external pressures have disrupted Canadian businesses quite like the escalating U.S. tariffs and trade tensions. These measures have created an environment of unpredictability, which has significantly impacted mergers and acquisitions activity across the country. What we're seeing now is a growing divide: a Canadian M&A landscape split between companies that are thriving and those that are struggling.

Winners in the Storm: Resilient Companies Attracting Interest

Despite the uncertainty, there are still bright spots in the market. Some Canadian companies have proven to be remarkably resilient and even thriving amid shifting trade policies. For these businesses, the current climate presents a unique opportunity.

In many cases, buyers are actively hunting for stable, well-performing companies. With a lack of high-quality targets available, strong performers are getting more attention and, in certain cases, premium valuations. Their ability to weather supply chain disruptions, adapt pricing strategies, or pivot operations is generating market confidence.

For owners of such businesses, this is an opportune time to explore a potential exit or partial liquidity events. The scarcity of these solid companies has created a “seller’s advantage” in this some corner of the market.

On the Sidelines: Encouraging Struggling Companies Rethink Strategy

On the flip side, companies directly impacted by tariffs, especially those dependent on cross-border trade, are finding themselves in a more difficult situation. Revenue and profit pressures are impacting valuations, making it a less-than-ideal time to enter the M&A market.

Rather than rushing into a deal under unfavorable conditions, these companies are better served by focusing inward. We encourage private company owners to strengthen operations, streamline systems, and explore out-of-the-box solutions. The goal should now be to improve internal business processes and adjust strategy with the expectation that a more normal level of business activity will resume soon.

Buyers Are Still Active But More Strategic

From the investor’s side, interest hasn’t disappeared, it has just become more cautious. In many cases, private equity are focused on their existing platform investments and making bolt on acquisitions for companies and industries which they are familiar.  This approach reduces broader market risk and keeps capital working in areas which fund managers are intimately familiar.  

For the large corporates, public market valuations (excluding the healthcare sector) are encouraging strategic acquisitions in sectors where companies have deep knowledge but limited presence. For example, this could be an Ontario-based engineering firm with limited personnel in Western Canada.

Conclusion: Strategy and Readiness Matter Most

Canadian private company owners face difficult but navigable transaction marketplace. For those thriving, now may be the perfect moment to explore a sale. For those impacted, the best path may be internal focus and preparation for a better market window.

In either case, the key to success is a clearly articulated strategy. Understanding where your company fits within this split landscape can help shape the right decisions and weather today or sometime in the future will make for a best case transaction outcome.