Executive Briefings

M&A Activity, While Not as Robust as in Pre-recession Days, Is Clearly on the Way Back

After years of stagnant activity, mergers and acquisitions surged in 2014, with the announcement of more than 7,500 deals with a combined value exceeding $3.5tr. That's an increase of more than 7 percent by number and more than 25 percent by value compared with 2013. While that volume hasn't yet reached the high of nearly 10,000 deals set in 2007, a new wave of activity is clearly under way.

More than a third of the total value of deals announced in 2014 came from large deals — with more than 90 percent of that coming from large deals by corporate acquirers, especially in the healthcare and technology, media, and telecommunications sectors. That's something of a surprise, both because previous research found that large-deal M&A strategies are riskier to execute and create less value than programmatic M&A and because, for the first time in our reckoning, investors seemed to approve. In fact, since 1998, the average announcement effects have never shown investors to be as optimistic about large deals as they have been in the past few years.

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More than a third of the total value of deals announced in 2014 came from large deals — with more than 90 percent of that coming from large deals by corporate acquirers, especially in the healthcare and technology, media, and telecommunications sectors. That's something of a surprise, both because previous research found that large-deal M&A strategies are riskier to execute and create less value than programmatic M&A and because, for the first time in our reckoning, investors seemed to approve. In fact, since 1998, the average announcement effects have never shown investors to be as optimistic about large deals as they have been in the past few years.

Read Full Article