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Canadian firms pursue growth through acquisitions: Grant Thornton

Canadian companies are pursuing growth through acquisitions over the next three years, says a Grant Thornton International Business Report.


May 14, 2012
by PLANT STAFF

TORONTO: Canadian companies are pursuing growth through acquisitions over the next three years, says a Grant Thornton International Business Report.

Results from the 2012 survey that shows a global appetite for mergers and acquisitions (M&A) over the past 24 months, despite economic challenges, show that 42% of Canadian businesses plan to grow through acquisition.

The overall proportion of businesses seeking to grow through M&A globally has risen significantly from 26% in 2010 to 34% in 2012.

Canadian companies say they are doing so primarily to access new geographic markets (69%), but also to build scale (48%), access lower cost operations (39%) and acquire new technology or an established brand (34%).

Survey results reveal 70% are looking domestically, while 23% are looking outside Canada’s borders, while global results show an overall increase in the number of companies seeking to expand through a cross-border transaction – from 28% last year to 33% in the 2012 survey.

“Canadian merger and acquisitions activity is being driven by growth-hungry companies in a tepid economic environment, the ageing population of the Western world and strong access to funding,” says Troy MacDonald, corporate finance partner in Grant Thornton LLP’s Toronto office.

The advisory firm says most Canadian companies plan to finance their growth through retained earnings (68%), bank finance (55%) and private equity (31%).

Only 12% of Canadian companies foresee a change in their own ownership over the next three years, and of these, 31% said they expect an acquisition by a competitor.

Regions most interested in making an acquisition in the next three years are North America (37%) and the BRIC economies (35%). This compares to only 28% in mainland Europe, 25% in Asia Pacific and in particular companies in the troubled economies of Greece, Ireland and Spain where only 16% indicated an interest in M&A activity in the coming three years.

Click here for the report.