New research from Greenwich Associates suggests the Canadian M&A market could build steam in the months ahead. If it does, Canadian companies will have the luxury of calling on a relatively large group of domestic investment banks that are evenly matched in terms of both the quality of service delivered to large corporate clients and in market penetration in mergers and acquisition, equity capital markets and debt capital markets services.

At the top of this market is a group of three dealers including BMO Capital Markets, RBC Capital Markets and CIBC, all of which are cited as important investment banking providers by an impressive 56–57% of large Canadian companies. Close behind are Scotiabank and TD Securities, at 45%. These firms are the 2013 Greenwich Share Leaders in Canadian Investment Banking. Not only are these firms in close to a dead heat in terms of footprint, several are also essentially tied in client service quality ratings.

Every year, Greenwich Associates asks the large Canadian companies participating in our research to name the firms they use for M&A advisory services and to rate them in a series of service quality categories. Firms that receive scores that top those of competitors by a statistically significant margin are named Greenwich Quality Leaders. In 2013, the Greenwich Quality Leaders in Canadian Merges & Acquisitions are BMO Capital Markets, CIBC and RBC Capital Markets.

“The market is largely controlled by the large Canadian dealers that entirely dominate in domestic M&A transactions,” says Greenwich Associates consultant Jay Bennett. “In international M&A foreign banks represent more serious competition.”

Approximately 45–50% of large Canadian companies expect to pay fees to advisors on M&A transactions in the coming year. Those expectations point to an increase in activity, given that only about a quarter of large companies engaged an advisor for an M&A deal last year.

Debt Capital Markets
Approximately two-thirds of large Canadian companies use RBC Capital Markets as a provider in debt capital markets, making the firm the leader in this business by a comfortable margin, followed by CIBC, TD Securities, BMO Capital Markets, and Scotiabank. These firms are the 2013 Greenwich Share Leaders in Canadian Debt Capital Markets. RBC Capital Markets’ leading position can be attributed in large part to the superior service it delivers to clients. RBC Capital Markets is the 2013 Greenwich Quality Leader in Canadian Debt Capital Markets.

Equity Capital Markets
BMO Capital Markets and RBC Capital Markets are the 2013 Greenwich Quality Leaders in Canadian Equity Capital Markets. “The companies covered in our research are large, established companies,” says Greenwich Associates consultant Peter Kane. “So this is a business of secondary equity issues—not IPOs. From the companies’ perspective, the biggest factors in this business are research/analyst coverage and institutional distribution.  RBC and BMO excel in both these areas.”