In Review: The Post-Pandemic M&A Scenario

This OG100 Town Hall, in partnership with CIBC, gave members perspective on the current M&A landscape, evaluating various buy-side and sell-side opportunities. Presented by Jim Logan, Vice President and Region Head, Commercial Banking and Trevor Gough, Managing Director & Head, Mid-Market Investment Banking of CIBC.

As financing volumes dried up in March 2020, many businesses pivoted successfully, cutting costs where possible and finding innovative ways to survive. By summer, balances surged, along with optimism, confidence and an increased appetite for buying opportunities.

Yes – the appetite for acquisitions came back quicker than anticipated. A number of sectors stayed strong (e.g. technology, food, e-commerce, logistics, packaging) and deals were closing by the end of 2020. By Q1 2021, there was a broadening of the market, and additional sectors were entering the M&A space. The 2020 Canadian Mid-Market M&A Quarterly Announcements were fairly stable, showing a slight dip in Q2 and Q3, and by Q4 were equal to Q1 numbers (see diagram).

Considering the low-interest rate environment, buyers are keen to find areas to invest and not surprisingly were the first to come back, looking for deals. Private Equity (PE) was back at the table in early summer, and corporate strategic buyers were back shortly after that. While PEs are looking to build a portfolio, strategics are looking for businesses to run. The balance between PEs and strategic buyers at the table is generally about 50/50, but it does ebb and flow slightly from year to year. While a number of companies have performed well and can show growth, and valuations are holding up, the decision to sell is often very personal. The M&A space is different than 2008-09, and the pandemic will likely be a strong trigger for business owners who are reconsidering where they want to allocate their time, equity and energy in the future. Sellers are coming back now as profits are normalizing and valuation multiples based on EBITDA are at pre-pandemic levels. Interesting to note, transactions in Technology and Distribution sectors have increased since COVID-19, at the expense of Manufacturing and Services (see diagram).

Valuations remain fairly stable and multiples are strong with the number of bidders up compared to pre-COVID (see diagram). Companies hit by the pandemic are including subsidies in EBITDA. CIBC suggests contributions range from 3-15%. The impact of the pandemic on M&A will be better understood once government subsidies are no longer in place.


  • A fairly high degree of inflation could affect long supply chains, especially those that depend on multiple currencies, and can present a lot of challenges in addition to increased costs.
  • Creative deal structures are being entertained including earn-outs at 10-15% of the transaction signaling a willingness to share future risk.
  • Individuals and governments are experiencing higher debt levels, but interest rates remain low and there is strong demand for growth and building a foundation for the future, which creates strong support for sell-side mandates.