Mid-Market M&A in Quebec: Resilience and Opportunity Amid Uncertainty

Author: Barbara Farina

The first half of 2025 highlighted both the resilience of Canada’s mid-market and the challenges that businesses continue to face in a shifting global and domestic environment. While lower interest rates and strong sectoral performance created momentum in some areas, geopolitical tensions, regulatory scrutiny, and valuation gaps tempered overall deal activity.

These dynamics are particularly relevant for Quebec’s business community, where mid-market companies are often at the forefront of innovation, growth, and investment. Understanding how these trends are unfolding locally and nationally is key to making informed strategic decisions.

Technology, Industrials, and Real Estate Lead the Way

According to LSEG’s mid-year review, the technology sector dominated Canadian mid-market M&A in H1 2025, accounting for 20% of overall deal value—approximately $76.9 billion, up 12% from the same period last year. Industrials followed at 13%, and real estate at 11%.

This sectoral mix underscores where investors and acquirers see value. Technology continues to attract attention as companies pursue digital transformation and scale innovative platforms. In Quebec, the strength of the local tech ecosystem, anchored by a highly skilled workforce and a strong startup culture, is reflected in this trend.

Industrial businesses, meanwhile, have benefited from renewed focus on supply chain resilience and onshoring strategies, while real estate transactions—particularly in logistics and mixed-use development—remain active despite higher borrowing costs.

A Market in Transition

Despite bright spots in these sectors, overall mid-market deal flow has been inconsistent. Early-year interest rate cuts did not immediately translate into higher transaction volumes, and geopolitical risk, regulatory reviews, and valuation challenges continued to slow some transactions.

For Quebec businesses, this uneven recovery highlights the importance of patience, preparation, and creative structuring. Buyers and sellers alike are learning to adjust expectations to reflect a more cautious but still active market.

Looking Forward: What Business Leaders Should Consider

The mid-market remains a dynamic arena for growth. While uncertainty persists, opportunities abound for those who approach transactions thoughtfully and strategically. A few themes stand out for business leaders in the months ahead:

• Be ready: Companies that have proactively addressed operational, legal, and financial readiness tend to move faster and fare better when opportunities arise.
• Sectoral focus: Understanding which sectors are attracting capital can help businesses position themselves more effectively in the market.
• Adaptability: Creative deal structures and openness to alternative financing arrangements may help bridge valuation gaps and regulatory hurdles.

Mid-market companies in Quebec play a critical role in the province’s economy. Staying informed and engaged with the evolving landscape enables business leaders to make confident, well-timed decisions—whether to acquire, divest, or invest in growth.

As we move through the second half of the year, continued attention to market signals, sector performance, and regulatory developments will be key to navigating this complex but opportunity-rich environment.

Source: LSEG – Mid-Market M&A Legal Advisory Review, H1 2025.