Wealth management, domestic AI and defence are the sectors to watch in next year’s mergers & acquisitions (M&A) market. That’s according to a new report from PwC, which tracked 642 deals worth $138.8 billion in this year’s third quarter.
“M&A activity is proving resilient,” according to a media release from the firm, issued Wednesday. “We’re seeing dealmakers sharply focused on acquiring new capabilities that not only tackle today’s challenges but also build lasting value.”
Lower interest rates and pent-up demand is driving significant activity in the Canadian wealth management industry this year. Michael Dobner, a partner and national leader of PwC Canada’s economics & policy practice, said that will continue in 2026, provided capital markets remain robust.
“Notwithstanding the market potential, consolidation in the sector could be the trend forward,” he said. “It’s a little bit cloudy.”
All eyes are on the AI sector, which has enjoyed a sparkling run-up in valuations. NVIDIA Corp. has climbed better than 37% year to date. Palantir Technologies Inc. is up more than 140%. If those numbers represent a bubble about to pop, watch for the wealth management deal flow to dry up.
Meantime, Canada’s AI sector is another one to watch on the M&A front.
“Larger companies may buy some startups … to augment their capabilities,” Dobner said.
AI was among the priorities highlighted in November’s federal budget. Dobner is impressed with what Ottawa policy makers have developed, “and we’re seeing some activity in that regard,” he said.
Still, PwC estimates that Canada’s commercial adoption of AI technology is 25%–35% behind that of the U.S. The long-term viability of the sector will depend heavily on companies’ ability to attract and retain leading talent.
The best defence
Ottawa has also signalled its prioritization of the Canadian defence industry. The budget promised $81.8 billion in spending over five years, largely in response to shifting geopolitical dynamics.
M&A discussions have already started as companies in the sector position themselves to profit from the windfall, Dobner said. “There are a lot of companies gearing up in that area,” he said. “I think 2026 and probably 2027 should be — barring any unusual events — fairly strong for the defence sector.”
Watch for international players to carve out a position for themselves in Canada at the same time domestic players look to expand their capabilities.
“We may also see industrial Canadian companies not currently in the defence space trying to pivot,” Dobner said. “The situation in the industrial area is not great these days.”
About half the M&A deals written this year have involved exclusively Canadian companies, according to PwC. That’s a result of continued global trade uncertainty. Dobner doesn’t expect there to be much international interest in the domestic manufacturing sector until there’s greater clarity on the tariff front.
This article has been updated.