Canadian M&A at Mid-Year

An introduction to Lark Street Capital

Welcome to the first quarterly report from Lark Street Capital. We founded the firm on a simple conviction: the owners of Canada’s mid-market companies deserve the same quality of advice that large corporations take for granted, delivered by a partner who stays with the mandate from the first conversation to the close.

Each quarter, this report will set out what we are seeing in Canadian M&A: where capital is flowing, what buyers are paying for, and what owners can do to prepare. We draw on published market data, which we cite throughout, and on our own experience across investment banking, private equity and corporate development.

We hope it is useful, whether or not a transaction is on your horizon.

Value at a record, volume at a low

Canadian M&A divided sharply in the second quarter. Crosbie & Company recorded 600 announced transactions, down 12% from the first quarter and the lowest count since Q4 2023, while announced value rose 51% to $114.5 billion. A record 23 transactions above $1 billion accounted for $99.8 billion, or 87% of the total. Crosbie, Q2 2026.

Selectivity below $1 billion

The strength in headline value did not reach smaller transactions. The value of deals under $1 billion declined for a second consecutive quarter, from $21.5 billion in Q4 2025 to $18.3 billion in Q1 and $14.7 billion in Q2. Transactions under $250 million made up 80% of deals with disclosed values, six points lower than in Q1. Crosbie points to higher fuel costs, softer demand and reduced seller appetite, and to buyers applying closer scrutiny to earnings quality and business-specific risk. Crosbie.

Buyer intent remains. In a KPMG Canada survey of 252 business leaders, 33% planned a major acquisition within 18 months, rising to 36% among private and private equity-backed companies. KPMG Canada. Private lenders have become a primary source of acquisition financing in the C$25 million to C$500 million segment. Dentons.

Active, and concentrated in real assets

Canadian private equity recorded US$14.2 billion across 76 deals in the first quarter and a preliminary US$7.8 billion across 46 deals in the second, according to Preqin data published by Bennett Jones, with the Q2 figure expected to rise as late transactions are reported. Bennett Jones, H1 2026. Measured more broadly, including add-ons and exits, Mergermarket recorded US$30.28 billion of private equity-backed volume across 156 deals in the first half, the second-highest first half on record. Mergermarket.

A review on the horizon

The first mandatory joint review of CUSMA falls on July 1, 2026. Its outcome, and the path of US tariffs on steel, aluminum, autos and wood products, is the largest single source of uncertainty for Canadian companies with cross-border revenue. McMillan. The Bank of Canada has held its policy rate at 2.25% since October 2025. Bank of Canada.

Three steps worth taking now

1. ICommission a quality-of-earnings review. Buyers will test every adjustment; knowing your defensible earnings before they do protects price.
2. IIQuantify trade exposure. Document US revenue, CUSMA compliance and tariff-affected inputs, so a buyer prices facts rather than uncertainty.
3. IIIReduce reliance on the owner. A second layer of management and documented customer relationships make a business easier to transfer and more valuable to buy.

Independent, partner-led M&A advisory for founders, families and owners of Canadian companies, from Vancouver and Toronto. For a confidential conversation about your company:

1. Crosbie & Company, Canadian M&A Report Q2 2026.
2. Bennett Jones, The H1 2026 PE Briefing (Preqin data, US$).
3. Mergermarket, Dealspeak North America, July 2026.
4. KPMG Canada, business leader survey, January 2026.
5. Dentons, Canadian M&A outlook 2026.
6. McMillan, CUSMA joint review; Bank of Canada, policy interest rate.

Important information. This report is provided by Lark Street Capital Corp. for general information only and does not constitute investment, legal, tax or accounting advice, or an offer or solicitation to buy or sell any security. Third-party data is believed reliable but has not been independently verified. Figures are in Canadian dollars unless marked US$. © 2026 Lark Street Capital Corp.