As rates of interest look to fall even additional over the subsequent yr, the urge for food for mergers and acquisitions might enhance. Undoubtedly, valuations could have crept greater throughout the board, with the TSX Index and S&P 500 each recent off hitting new all-time highs. Nevertheless, not each sector has been in a bull market.

And it’s a few of these extra challenged corners of the market that I consider could possibly be ripe for wheeling and dealing as borrowing prices look to descend farther from right here. Although decrease rates of interest themselves don’t assure a wave of mergers to return, I do suppose that the stage is likely to be set for dealmaking within the new yr. Listed below are the 2 prime firms I consider will develop into extra energetic on the M&A entrance.

Alimentation Couche-Tard

Alimentation Couche-Tard (TSX:ATD) inventory has had an uneventful 2025. The 7 & i Holdings deal isn’t taking place, and it’s unclear what its subsequent large M&A transfer can be. With the inventory nonetheless within the pink (by round 7%) thus far this yr, it’s not laborious to throw within the towel, at the same time as decrease charges pave the best way for an surroundings that’s extra conducive to M&A.

Certain, market multiples could also be on the upper finish. However there are good offers available within the comfort retailer house. As we enter a brand new age with decrease charges, I consider Couche-Tard is not going to take too lengthy to begin saying offers. Till then, I’d take a look at shares of ATD as a turnaround play to learn from the potential return of a “decrease (charge) for longer” sort of surroundings.

As buyers and analysts develop impatient whereas ATD inventory stays caught within the low-$70 vary, I’d look to be a contrarian purchaser. The expansion-by-acquisition story is commonly misunderstood, but it surely might not be for lengthy, as we enter a brand new yr with Couche’s new administration staff on the hunt for strategic takeover targets.

Certain, they’re likelier to be smaller, tuck-in offers, quite than a maybe sell-off-inducing blockbuster to the magnitude of a 7 & i. However, on the finish of the day, I believe smaller offers scale back the chance issue. The massive query is whether or not Couche-Tard will look to broaden in Europe, the place it already has a robust presence, or Asia, the place it has a comparatively small presence, or if it’s fantastic sticking with North American offers. Time will inform. Both approach, Couche-Tard can simply purchase its method to greater progress.

Constellation Software program

Constellation Software program (TSX:CSU) is one other Canadian firm that I count on will begin making good offers going into the brand new yr as charges come down. In fact, small-cap tech valuations have develop into considerably inflated, which can be a motive why the tempo of offers hasn’t been as fast as in recent times. Personally, I believe administration deserves the good thing about the doubt, at the same time as some buyers hit that promote button on weak spot. On the finish of the day, Constellation is aware of the right way to spot worth in a high-growth nook of the software program scene, and if it sees a kind of “GARP” (progress at an affordable value) performs, I do suppose it’ll be able to ink a deal.

If valuations do are available throughout the board and charges fall, Constellation is likely to be in for a dream state of affairs that’d permit it to supply critical worth for shareholders. For now, the inventory is down 23%, however don’t count on administration to hesitate or rush if requires extra offers develop louder.