A record year for global M&A

This year will go down as the best on record for global mergers and acquisitions (M&A) with $4.6trn-worth of deals.

This year will go down as the best on record for global mergers and acquisitions (M&A). There have been $4.6trn-worth of deals, with US companies leading the charge they accounted for an unprecedented $2.3trn. Asia had a record year too. The year also saw the most mega-deals, defined as mergers worth over $5bn, in history: 137. Eye-catching examples included Pfizer's $160bn pharma tie-up with Allergan, and the $106bn brewing merger of Anheuser-Busch InBev and SABMiller.

What the commentators said

Financing is cheaper than in 2007, noted the FT, with the benchmark US ten-year Treasury yield just over 2% today, less than half its 2007 level. American firms also have an extra trillion of cash on their balance sheets. A greater proportion of deals than last time are being financed with the buyers' equity instead of debt, suggesting less exuberance than in 2007.

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However long it goes on, however, it seems likely to end the same way.The mega-deals should be an especially stark reminder that acquirers tend to overpay and destroy value, as Bloomberg.com's Gadfly blog pointed out. The only people who do well out of M&A are bankers. Banks have generated over $26bn in fees from the global spree, the most since 2008. As Warren Buffett jokes, M&A has "prompted the saying that fees too often lead to transactions rather than transactions leading to fees".




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