Canadian executives are optimistic about the global economy, according to EY’s latest Capital Confidence Barometer, but this doesn’t translate into certainty about the economy here in Canada.
A vast majority of those surveyed – 93% – see improvements globally, but only 13% see positive changes in this country.
“This trend was consistent around the globe; however, Canada’s pessimism in its economy was more dramatic than in other countries,” EY said in its report.
“This isn’t terribly surprising given the recent volatility in energy and currency markets that have affected the Canadian economy over the last six months.”
Canadian companies are shifting their organic growth strategy focus to more varied geographic markets. While they continue to invest in the United States, they are casting a wider net that includes South America, with Columbia, Argentina and Chile becoming some of the top targets.
The report points out this is consistent with Canada’s focus on natural resources.
Almost three-quarters – 72% – of those surveyed said they were planning at least one acquisition in the next year. This is a significant improvement since the last report in October 2014, which found 24% of companies had similar plans. It is also the highest level since EY started conducting this survey in 2009.
“Many Canadian companies are looking to mergers and acquisitions to address challenges in their existing business,” said Doug Jenkinson, EY transaction advisory services partner. “While Canadian executives aren’t overly optimistic about our country’s economy, that sentiment isn’t holding them back when it comes to looking at deals.
“Even in Alberta’s distressed oilpatch, we’re still seeing deals get done, and there are surely opportunities for those companies that are strategic.”
Despite this optimism, the number of companies planning five deals or more has plunged from 78% six months ago to 9%. Most companies planning acquisitions expect to keep the number of deals at either one or two. The majority of these deals will be small, at under $250 million each, on average.
