A Canadian pulse on private equity

Canada's private equity market demonstrated significant momentum throughout 2025, culminating in full-year deal values of $63.8 billion USD across 596 completed transactions. This performance marked a notable recovery trajectory, particularly following mid-year softness as improved supply of larger assets entered the market in Q4. The Canadian market's rebound reflects broader global trends, where private equity activity surged with global deal values rising 57% year-over-year, driven primarily by high-conviction transactions and disciplined capital deployment rather than deal volume expansion.

Within this context, Q3 2025 proved particularly robust for Canadian PE, with investment rebounding to $16.3 billion. KPMG's Pulse of Private Equity report attributed this surge to market stability and an influx of new capital from retail investors and family offices, which have become increasingly important sources of capital for exits and growth opportunities. This diversification of capital sources reflects a structural shift in the Canadian alternative investment landscape, as traditional institutional LP bases expand to include non-traditional participants seeking exposure to private equity returns.

According to KPMG's latest market assessment, Canada's PE sector is transitioning into a "constructive but cautious phase" defined by several interrelated dynamics. Improving liquidity conditions, coupled with policy-driven investment initiatives, have enhanced deal-making capacity. Simultaneously, sponsors demonstrate heightened selectivity in target identification and heightened focus on exit preparedness, recognizing that disciplined portfolio management directly impacts returns. Key sectors attracting PE attention include infrastructure, energy, and artificial intelligence, where conviction-driven capital deployment is most evident.

The global PE environment has reinforced positive Canadian market dynamics. The stabilization of capital costs has enabled buyers and sellers to realign on pricing expectations, restoring confidence in underwriting and enabling more rigorous scenario analysis. This normalization supports the Canadian market's constructive outlook. Exit markets have recovered substantially, with strategic acquirers assuming greater deal activity and lifting exit values by more than 50%, providing portfolio companies with multiple viable monetization pathways. With general partners expressing positive sentiment for 2026 and expecting continued acquisitions and exits backed by disciplined underwriting, the Canadian PE market appears well-positioned for sustained activity, provided macroeconomic conditions remain supportive.