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.

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".

Recommended

Stockmarkets shrug off turbulence
Stockmarkets

Stockmarkets shrug off turbulence

Stockmarkets have hit their first bout of turbulence of the year, but most are clinging onto January’s gains.
4 Feb 2021
The FTSE 100 has clawed back above 7,000 – how much higher can it go?
UK stockmarkets

The FTSE 100 has clawed back above 7,000 – how much higher can it go?

The FTSE 100 index has risen to over 7,000 for the first time in over a year – it now sits just above where it was in 1999. But its era of neglect cou…
19 Apr 2021
Three ways to make Biden's global tax rate work for Britain
Global Economy

Three ways to make Biden's global tax rate work for Britain

Joe Biden wants to set the corporation tax rate for the world. Britain should accept this, says Matthew Lynn – and game the system.
18 Apr 2021
The charts that matter: the dollar extends its fall
Global Economy

The charts that matter: the dollar extends its fall

The US dollar took quite the tumble this week. Here’s how the charts that matter most to the global economy reacted.
17 Apr 2021

Most Popular

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?
Bitcoin

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?

Dogecoin – a cryptocurrency created as a joke – has risen by more than 9,000% this year alone. Saloni Sardana looks at how something that began as an …
19 Apr 2021
The FTSE 100 has clawed back above 7,000 – how much higher can it go?
UK stockmarkets

The FTSE 100 has clawed back above 7,000 – how much higher can it go?

The FTSE 100 index has risen to over 7,000 for the first time in over a year – it now sits just above where it was in 1999. But its era of neglect cou…
19 Apr 2021
The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021