Many predicted that 2017 would be another record year for Canadian
mergers and acquisitions (M&A). There are also
currently some predictions that interest rates will continue to
rise despite the recent announcement of a contraction in the
economy. In this blog post we consider these two factors.
As depicted in Figure 1 below, while 2017 has seen a greater
number of deals as compared to 2016, the value of these deals has
generally been lower. Given the expectation of rising interest
rates, this is consistent with our analysis that rising rates has
little effect on the number of deals but a negative effect on deal
value.
As
previously reported, the Bank of Canada increased the overnight
lending rate from 0.75 per cent to 1.0 per cent on September 6,
2017 but, as reported
here, refrained from increasing the rate any further on October
25, 2017. Observers predicted that increasing interest
rates were unlikely to affect M&A activity. However,
statistical
