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During Q3 2020, the economy began showing broad signs of recovery from COVID-19. The M&A market, similarly, saw a rebound in activity, with aggregate deal value increasing to $3.5 billion across 54 transactions from previous lows in Q1 and Q2. By comparison, Q2 totalled $2.7 billion in aggregate deal value across 45 disclosed transactions. Increased deal volumes suggest that after months of taking a defensive approach. Investors have become cautiously optimistic and sentiment is generally improving in the face of uncertainty.

As expected, Canadian mid-market M&A activity in Q2 2020 pulled back further, as aggregate deal value decreased to $2.7 billion, across 45 disclosed transactions. By comparison, Q1 2020 totaled $2.9 billion in aggregate deal value across 50 transactions. The last four quarters have displayed the lowest deal volumes seen in recent history, suggesting investors continued to take a defensive approach and exhibited reduced risk appetite towards making transactions in an increasingly uncertain global environment.

Apparent trend of slowdown in transaction volume due to COVID-19.

Engineering & Construction merger and acquisition (M&A) activity in the second quarter of 2020 exceeded $140 million in disclosed transaction values across 67 deals in Canada and the US. Deal flow in the industry is expected to slow until COVID-19 restrictions are lifted.

M&A activity in the North American food and beverage industry declined in Q2 2020 due to the continued impact of the COVID-19 pandemic. Overall disclosed transaction volume decreased from 215 to 118 and total disclosed transaction value decreased from $11.4 billion to $1.4 billion from Q1 2020 to Q2 2020 respectively.

Healthcare merger and acquisition (M&A) activity in the second quarter of 2020 exceeded $5.5 billion in disclosed transaction value across 377 deals in Canada and the US. Deal-making and valuation multiples remained strong for essential healthcare providers, such as pharmacies, who experienced stable to above-average performance in the period as they remained open throughout the COVID-19 pandemic.

M&A activity in the North American agriculture industry declined in Q2 2020, resulting from the global market slowdown caused by COVID-19. Overall disclosed transaction volume decreased from 98 to 71 and total disclosed transaction value decreased from $2.6 billion to $629 million from Q1 2020 to Q2 2020 respectively.

Q2 2020 Canadian Exploration and Production (E&P) disclosed transaction value mimicked Q1 2020, while transaction volume increased from 15 to 17.

M&A activity within the manufacturing sector in North America fell in Q2 2020 to an unprecedented low in both volume and amount due to the impact of COVID-19. The number of disclosed deals during the quarter dropped to a mere 43 from 108 in the previous quarter, while total disclosed transaction value decreased from $45.9 billion to only $10.9 billion.