Nation-building agenda and steadier rates set to boost Canadian M&A in 2026, KPMG survey finds
A KPMG Canada survey finds one-third of business leaders plan major acquisitions in the next 18 months, driven by federal infrastructure spending and a firmer economic outlook.
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By Torontoer Staff
A new KPMG Canada survey suggests Canadian merger and acquisition activity will pick up in 2026, led by the federal government's nation-building agenda and a stronger business outlook. Thirty-three per cent of the 252 business leaders polled said they plan to make a major acquisition in the next 18 months, a sign of renewed deal appetite after a turbulent 2024 and 2025.
KPMG points to several factors that should underpin dealmaking this year: Ottawa's large-scale investment plans, a steady interest rate environment, demographic shifts and a strategic push for more Canadian-to-Canadian trade. The survey was conducted by Angus Reid Group in November and covered leaders across 14 sectors.
Why nation-building will push deals
Ottawa's recent budget framed an investment blitz that KPMG says will create acquisition opportunities across adjacent sectors. The federal plan outlines $1 trillion in planned investment over five years, with earmarks including $25 billion for housing, $30 billion for defence and security, $115 billion for major infrastructure and $110 billion to boost productivity and competitiveness.
The government has also created a major projects office to accelerate approvals for large-scale proposals. Projects identified so far include ports, railways and energy corridors. That pipeline of work creates demand for suppliers and service providers, and KPMG expects consolidation as businesses scale up to compete for contracts.
The survey is pretty clear on a few things. One is that companies in Canada are looking to do acquisitions. That’s very prominent.
Marco Tomassetti, president, KPMG Corporate Finance Inc. Canada
Sectors likely to see activity
- Construction and housing suppliers, as the government targets $25 billion for housing
- Infrastructure contractors and materials suppliers, tied to major projects funding
- Defence and security contractors, following a $30 billion commitment
- Energy and transportation firms, including ports, railways and energy corridors
- Mid‑market manufacturers and component suppliers that service large capital projects
KPMG specifically flagged the private mid-market as a hot spot, noting that deal appetite returned in the latter half of 2025 after a pause linked to international trade tensions. Businesses that operate in the supply chain for large projects are prime acquisition targets as buyers look to secure capacity and scale.
Financing, interest rates and deal pricing
A more predictable interest rate environment is another factor supporting deals. KPMG said steady rates keep capital accessible and affordable, making it easier for buyers to finance transactions and for sellers to value assets. Many economists expect the Bank of Canada to hold its key policy rate around 2.25 per cent for most of 2026.
Tomassetti noted that M&A is difficult when future earnings are highly uncertain, because pricing depends on how buyers forecast future performance. With trade-related uncertainty easing for many sectors and borrowing costs relatively stable, KPMG sees clearer sightlines for dealmakers.
Risks that could slow activity
KPMG warns that trade tensions remain a wildcard. Tariffs and trade disputes depressed deals in parts of 2024 and 2025, and a renewed deterioration would affect sectors exposed to U.S. measures. The Canada-United States-Mexico Agreement has helped shield Canada from some of the direct impacts so far, but the accord is scheduled for a review in July, which could create fresh uncertainty.
Other risks include project delays, shifts in political priorities, and interest rate surprises. While KPMG reports a cautious optimism among business leaders, the firm also describes an environment with 'a lot of noise' around trade and policy that could influence M&A pacing and valuations.
What business leaders told KPMG
Beyond acquisition plans, respondents signalled a desire to reduce reliance on U.S. growth and to strengthen domestic supply chains. That sentiment aligns with federal messaging on an invest-in-Canada theme and a push to capture more economic benefit from major capital projects.
KPMG sees the coming wave of deals as practical consolidation rather than speculative activity. Buyers will target firms that can scale quickly to meet contract requirements or that add strategic capabilities tied to government-led projects.
What to watch in 2026
- Progress and timelines on major projects identified by the federal projects office
- The outcome of the CUSMA review in July and any trade policy shifts
- Financing conditions and Bank of Canada rate guidance
- Deals in the private mid-market and consolidation among suppliers to large projects
KPMG's survey points to an M&A environment shaped by public investment and clearer financing conditions, with mid-market consolidation likely to accelerate as project pipelines firm up. Dealmakers will still need to manage trade and policy risks, but the overall picture is one of cautious opportunity for Canadian firms aiming to grow by acquisition.
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