What's going on?
Data out this week showed global mergers and acquisitions (M&A) hit a record high of more than $5 trillion this year as companies couldn’t help but scratch that dealmaking itch.
What does this mean?
You don’t have to dig through too many crates to find reasons for the boom. Super low interest rates have made borrowing cash to buy rivals cheap while sky-high stock prices have made raising funds much easier. Mix that with a robust post-Covid bounceback in consumer demand – and, in turn, profits – and you can see why companies were keen to find new ways to one-up the competition.
Armed with the almighty dollar, American firms have led the way this year. The value of US deals nearly doubled compared to 2020, while Europe and Asia Pacific saw rises of 47% and 37%, respectively. Overall, the value of global M&A is already 63% higher than 2020’s total and 16% higher than the previous record set back in 2015.
Why should I care?
For markets: Break the bank.
Fees for advising on M&A are one of the biggest ways investment banks make money, so this year’s boom will have suited them just fine. And since they tend to pass that cash onto investors through dividends and buybacks, perhaps it’s no surprise that shares of top banks Goldman Sachs and Morgan Stanley are up more than 45% this year, almost double the wider market.
Zooming out: Break the internet.
More fees for Wall Streets’ finest are on the way: Triller, a short video platform that rivals TikTok, announced this week it’ll join the stock market by merging with video software firm SeaChange. Setting its own record for most buzzwords in a press release, Triller says the deal will help the combined $5 billion company expand into the metaverse, web3, and the creator economy.