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.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

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".

Advertisement

Recommended

Visit/519858/how-long-can-the-good-times-roll
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Visit/517688/the-british-equity-market-is-shrinking
Stockmarkets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019
Visit/511212/reasons-for-investors-to-be-bearish-but-stick-with-the-stockmarket-bulls
Stockmarkets

There are lots of reasons to be bearish – but you should stick with the bulls

There are plenty of reasons to be gloomy about the stockmarkets. But the trend remains up, says Dominic Frisby. And you don’t want to bet against the …
17 Jul 2019
Visit/510684/good-news-on-jobs-scares-stockmarkets
Economy

Good news on jobs scares US stockmarkets

June brought the best monthly US jobs growth of the year, but stockmarkets were not best pleased.
11 Jul 2019

Most Popular

Visit/investments/commodities/gold/600998/extraordinary-times-buy-gold-buy-silver
Gold

Extraordinary times create extraordinary opportunities – these assets look cheap

With the stage set for some monumental fiscal stimulus, this is most definitely a time to own some gold. And if you’re bold enough, says Dominic Frisb…
18 Mar 2020
Visit/investments/bonds/government-bonds/601026/corona-crisis-will-end-bond-bull-market
Government bonds

The corona crisis will mark the end of the longest-running trend in markets

With politicians and central bankers enthusiastically embracing money printing and a recession almost certainly not too far off, the slide in bond yie…
20 Mar 2020
Visit/economy/global-economy/600999/the-moneyweek-podcast-the-end-of-capitalism
Global Economy

The MoneyWeek podcast – The end of capitalism?

John and Merryn talk about the – hopefully temporary – suspension of capitalism as government stimulus takes off in a big way. Plus, how this crisis m…
18 Mar 2020
Visit/517625/tr-european-growth-trust-why-investors-shouldnt-overlook-europe
Sponsored

Why investors shouldn’t overlook Europe

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, tackles investor questions around Europe’s economic outlook and the conseq…
6 Nov 2019