Merger and acquisition (M&A) activity involving Canadian companies fell to its lowest level in more than two decades during the second quarter of the year, reflecting growing caution among businesses amid geopolitical tensions and continued trade uncertainty. According to data from LSEG Data & Analytics, only 460 transactions were announced between April and June, marking the weakest quarterly deal count since records began in 2005. Analysts attribute the slowdown to uncertainty surrounding global trade policies and the economic fallout from the conflict involving the United States and Iran, which has made buyers and sellers more hesitant to pursue acquisitions.

Despite the sharp decline in the number of deals, the total value of Canadian M&A transactions remained strong at approximately US$77 billion, supported by several high-profile acquisitions. Major transactions included Shell's acquisition of ARC Resources, the sale of First Capital REIT, and GFL Environmental's purchase of Secure Waste Infrastructure, highlighting that while smaller and mid-sized deals have slowed significantly, large strategic acquisitions continue to attract investor interest. Market experts say investors remain willing to pay premium valuations for high-quality businesses, even as weaker companies struggle to attract buyers.

At the same time, Canada's corporate debt market continued to expand at a record pace. Companies issued roughly $29 billion in corporate bonds during the second quarter, a substantial increase from the same period last year, while additional billions were raised through Canadian dollar-denominated "maple bonds" issued by foreign companies. Strong investor demand has kept the bond market highly active, with many offerings receiving orders far exceeding the amount available. Financial institutions say investors continue to have significant capital to deploy, partly because bonds issued during the COVID-19 pandemic have matured, returning large amounts of cash to the market.

Canada's equity capital markets also showed signs of improvement. Although overall stock issuance remained below historical averages, the market for initial public offerings (IPOs) gained momentum following the successful public listing of Apotex Health Corp. Industry participants believe the strong performance of recent IPOs could encourage more companies to pursue stock market listings later this year, provided market conditions remain stable. Analysts expect business confidence to improve if geopolitical tensions ease and greater certainty returns to global trade, potentially supporting a broader recovery in Canadian dealmaking during the months ahead.