It’s boom times for investment banks again – investors beware

The market for mergers and acquisitions is hitting record levels again. That's great news for investment bankers, but it's a red flag for investors. John Stepek explains why.

Medline workers assembling PPE kits
The $34bn bid for medical equipment supplier Medline is the biggest since the 2008 financial crisis
(Image credit: © Bloomberg via Getty Images)

The biggest leveraged buyout ever attempted was the near-$50bn purchase of Canadian telecoms group Bell Canada Enterprises (BCE) by a group of private equity firms (a leveraged buyout is when a company is bought mainly using lots of debt, rather than cash or shares – hence the term “leveraged”).

The deal was signed off at the end of June 2007, literally weeks before the credit crunch began in earnest. It was to be financed with just over $30bn of debt.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.