The coming year is likely to see the return of the mega-deal. Why? First, the impact of Brexit is fading, and as the year unfolds companies will be feeling a lot more confident that a reasonable deal will be struck with the EU and they can get on with building their businesses. Deals that have been on hold will be back on again. Second, we are heading into the late, euphoric stage of a bull market. In the past, that has always been marked by a flurry of mergers.
There is no reason to expect this one to be any different. Finally, companies are extraordinarily cash-rich. British businesses are sitting on an estimated £244bn. Sooner or later they will want to spend some of that and it might as well be now. So what might the big deals be? Here are five possibilities.
Amazon buys Waterstones. The internet giant that began by selling books online has already started travelling in the opposite direction, opening up a string of bookshops in the US. At the same time the UK's largest chain is reported to be up for sale. You don't exactly have to be Sherlock Holmes to work out the potential fit. Amazon is willing to buy bricks and mortar retailers when there is a strategic logic to it.
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Disney buys Tottenham Hotspur. Disney has just bought Fox in the US, and will scoop up a dominant stake in Sky as part of that deal, to beef up its range of programming to take on the streaming giants Netflix and Amazon. But sport is where an ambitious Disney will be able to mount a real challenge. At the same time, Spurs look to have gone as far as they can under present ownership. Why not buy the club as a way in to the Premier League? A billion should be enough, and Disney might get half of that back by selling Harry Kane to Real Madrid.
Barclays buys Worldpay. A host of aggressive new companies are muscling their way into the traditional financial services market with new ways of settling bills, moving money, raising deposits and making loans. As their market share and profits get eaten away, the major banks will ultimately respond the way big companies usually do by acquiring one of the upstarts. Of the high-street banks, Barclays has always been the most acquisitive, and Worldpay, which joined the FTSE 100 back in 2015, is the biggest target. It is the obvious choice.
Philip Green sells Top Shop. After the BHS pension debacle, Green could be forgiven for keeping a very low profile. But Top Shop is the jewel in his empire and the British high street is a terrible place to trade right now. The internet is cutting into sales, business rates are punishing, consumers are squeezed, and now, on top of all that, the national living wage is pushing up staff costs. Green has always been a trader at heart, with a wheeler-dealer's sense of when to buy and sell. Why not cash in on his most valuable asset before it is too late? Plenty of private-equity houses would pay a decent price for Top Shop and so might a global brand like Gap.
Facebook buys WPP. Over three decades, Martin Sorrell has proved himself the most skilful dealmaker in the media industry. Through hundreds of acquisitions he has built WPP into the largest marketing business in the world and, although some acquisitions have inevitably proved better than others, there has never really been a total dud. But Sorrell is not getting any younger.
He is now into his 70s, and the share price suggests he does not have the vigour he once did: WPP's shares are down from over 1,800p last January to under 1,400p now, and that is during a bull market. Why not bow out with one final coup and sell the whole operation to a cash-rich Facebook? After all, it is already arguably the largest marketing vehicle ever created. And if anyone could get a good deal out of Mark Zuckerberg, Sorrell certainly could.
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