In-Depth: Acquisition and Leveraged Finance - Edition 12 - Canada

Leveraged lending is used by Canadian borrowers to fund a number of activities, including acquisitions, capital expenditures, dividend recapitalisations, refinancing of existing debt and ongoing operations. Following a weak 2023 and gradual uptick in 2024, acquisition activity slowed again in the first half of 2025 from the levels seen in the second half of 2024 as a result of geopolitical uncertainties related to global conflicts and tariffs, but then significantly increased through the second half of the year, uplifted by rising commodity prices and lower interest rates. Consequently, Canadian acquisition activity in 2025 reached a multi-year high. This positive momentum is expected to continue into 2026 despite significant challenges to Canadian M&A activity arising from external market forces, including the continuing uncertainty around US trade policy and the implementation of tariffs.

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