Big-ticket transactions prop up values as exits, mid-market activity and fundraising slowly recalibrate
Canadian private equity enters 2026 with a familiar tension as headline deal values remain robust, but the underlying market is narrower, more selective and increasingly driven by a handful of large-cap transactions.
That is a key takeaway from a new report from McCarthy Tétrault, which highlights how the PE industry has adjusted to higher rates, geopolitical risk and constrained liquidity without losing momentum altogether.
By late November 2025, Canadian PE deal value had reached roughly $46 billion, putting the year on track to finish close to 2024 and near the upper end of the past decade’s range. However, transaction volumes are lower than last year, reinforcing the sense that capital is concentrating at the top end of the market rather than flowing broadly across mid-sized and smaller deals.
That concentration is seen in the six transactions above $2.5 billion that had already closed by the end of November, nearly matching all of 2024. At the same time, activity declined across most mid-market size brackets, underscoring how fewer, larger deals are doing more of the heavy lifting for overall value.
A recent report on the global PE landscape also reveals challenges for the industry, which it says enters 2026 in recovery mode rather than a full-on rebound.
McCarthy Tétrault’s data shows quarterly trends reflective of a market still finding its rhythm as an exceptionally strong first quarter, boosted by marquee transactions such as Innergex Renewable Energy and GFL Environmental, was followed by a muted spring before dealmaking rebounded in the third quarter. The pattern suggests sponsors are willing to transact, but only when pricing, financing and strategic fit align.
Business products and services once again topped the rankings by deal value, supported by large, capital-intensive transactions, while energy and healthcare rounded out the top three. Technology continues to attract private equity interest, particularly in take-private transactions, where PE bidders paid meaningfully higher premiums than strategic buyers.
Canadian PE-backed exits fell sharply in 2025, with fewer than 70 transactions recorded by late November. While total exit value held up relatively well, implying larger average deals, the prolonged slowdown in exit volume continues to weigh on distributions and fundraising dynamics.
After a dramatic pullback in 2024, the On Target: 2026 Private Equity Outlook shows that capital raised by Canadian PE firms rebounded in 2025, reaching about $16 billion across 17 funds. That recovery signals improving sentiment among limited partners, even as competition for commitments remains intense.
