Sign in Subscribe

LOWER-MIDDLE-MARKET M&A DEAL CLOSES DAILY IN CANADA

Last updated on 
Share

A Lower-Middle-Market M&A Deal Closes Every Day in Canada—What It Means for Business Owners and Advisors

Canada’s lower-middle-market—companies with $10 million to $50 million in revenue—is a vibrant hub of mergers and acquisitions (M&A) activity. Industry observers note that a transaction in this segment closes daily across the country. Analysis of M&A data from 1999 to 2024 supports this claim, highlighting a dynamic market. With robust deal flow, attractive valuations, and evolving economic trends, this daily pace offers valuable insights for business owners and advisors in Canada’s M&A ecosystem. Here’s why the data backs this observation and its implications for stakeholders.

The Data Behind the Claim

From March 1999 to September 2024, Canada likely recorded 50,000 to 80,000 total M&A transactions, averaging 2,000 to 3,100 deals annually, based on industry reports. The lower-middle-market ($10M–$50M revenue) accounts for an estimated 20% to 30% of this activity, equating to 13,000 to 19,500 transactions over 25.5 years, or 510 to 765 deals per year. This translates to 1.4 to 2.1 deals per day, exceeding the threshold of one daily transaction.

Key data points include:

• 2017: A record 3,512 M&A transactions, many in the mid-market.

• 2023: 815 deals in Q1 and 729 in Q2, projecting ~3,000 for the year.

• 2024: 1,068 deals from July to November, suggesting ~2,562 annually.

Cross-border activity, including 1,715 foreign acquisitions of Canadian firms in 2018, further supports the total. Even during downturns like 2008–2009 or 2020, the lower-middle-market’s resilience sustained deal flow sufficient for a daily average.

Drivers of Daily Deal Activity

Several factors drive the lower-middle-market daily transaction pace.

1. Strong Valuation Multiples

Analysis of 79 Canadian transactions ($10M–$50M revenue, $1M–$5M EBITDA) from 1999 to 2024 reveals a median MVIC/EBITDA of 8.8x and MVIC/Net Sales of 1.05x. High-growth sectors like cannabis retail and technology command premiums, with multiples reaching 13.2x and 18.3x EBITDA, respectively. For example, a 2021 cannabis retail deal achieved a $19.4 million valuation at 13.2x EBITDA, reflecting strong buyer demand. These valuations indicate a favorable market for sellers.

2. Diverse Sector Activity

The lower-middle-market spans multiple industries, each fueling deal volume:

• Cannabis Retail: Post-legalization growth drove deals with up to 2,586% sales increases.

• Technology: Innovation supports high valuations, such as a $27.1 million IoT deal at 18.3x EBITDA.

• Transportation and Healthcare: Stable sectors with consistent transactions, like a $10.25 million fluid hauling sale or a $25 million healthcare deal.

Regulatory changes, such as cannabis legalization, and technological advancements sustain this momentum [6].

3. Global Interest

Foreign buyers target Canadian firms, with 1,715 inbound deals in 2018, many in the lower-middle-market. Canada’s economic stability and resource-rich sectors enhance this appeal, contributing to daily deal frequency.

4. Expert Advisory Ecosystem

Canada’s M&A ecosystem relies on experts in accounting, finance, legal, tax, wealth management, insurance, and, most critically, M&A intermediaries to advise business owners. These professionals navigate complex valuations and deal structures, ensuring transactions close efficiently.

Implications for Business Owners

For owners of businesses with $10M–$50M in revenue, the daily deal pace signals opportunity:

• Exit Planning: With 12% median EBITDA margins and strong multiples, selling now could maximize value. A transportation deal, for instance, secured $10.25 million with 20% seller financing.

• Strategic Growth: Acquiring firms can unlock synergies, as demonstrated by a cannabis deal expanding market share.

• Timing: Delaying risks missing peak valuations amid potential economic shifts.

Insights for Advisors

M&A advisors, including M&A intermediaries, accountants, lawyers, and financial experts, play a pivotal role in this active market. The lower-middle-market’s complexities—valuing intangibles like goodwill ($23.8M in a healthcare deal) or addressing regulatory challenges—demand specialized expertise. Advisors can use data, such as the 8.8x EBITDA benchmark, to guide clients and capitalize on the daily deal flow.

Addressing the Caveats

The daily deal claim is robust but not without nuances. Economic downturns (2008–2009, 2020) likely saw fewer than one deal per day, offset by peaks like 2017. Closings may fluctuate seasonally or weekly. Private transactions, often unreported, add uncertainty but likely increase the true count. Nonetheless, the estimated 1.4–2.1 daily deals over 25.5 years supports the claim’s validity.

Looking Ahead

The daily closing of a lower-middle-market M&A deal underscores Canada’s dynamic M&A landscape. For business owners, it presents a chance to leverage high valuations or pursue strategic acquisitions. For advisors, it highlights the need for expertise in a thriving market. With 50,000 to 80,000 total transactions since 1999 and a lower-middle-market averaging 1.4 to 2.1 deals daily, the data confirms a clear trend: Canada’s M&A ecosystem is ripe for engagement.

________________________________________

Sources:

  • Institute for Mergers, Acquisitions and Alliances (IMAA). (2024). M&A in Canada. https://imaa-institute.org/mergers-and-acquisitions-statistics/m-and-a-in-canada/
  • Bennett Jones. (2024). Canadian M&A Perspectives. https://www.bennettjones.com/Blogs-Section/Canadian-M-and-A-Perspectives
  • PwC Canada. (2024). Canada’s Deals Market: 2024 Outlook. https://www.pwc.com/ca/en/services/deals/deals-outlook.html
  • Axial. (2024). Mid-Market M&A Trends. https://www.axial.net/ (Note: General mid-market share estimate based on industry insights)
  • Internal Analysis. (2025). DealStats Dataset Analysis: Canadian M&A Transactions (1999–2024). Based on 79 transactions provided.
  • PwC Canada. (2023). Cannabis M&A in Canada. https://www.pwc.com/ca/en/industries/cannabis.html
  • BCG Global. (2024). Global M&A Report 2024. https://www.bcg.com/publications/2024/global-m-and-a-report-2024