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Mergers and Acquisitions Market Soars to New Heights

Mergers and Acquisitions Market Soars to New Heights

A recent study by The Economist found that year-to-date M&A transactions have already almost surpassed last year’s total and are still climbing: over $2.1 trillion has been spent on M&A transactions alone so far in 2015. Additionally, the median price of each transaction has also risen, making the M&A market even more attractive.

Below is the full report:

Giddy heights: the takeover boom

Mergers and acquisitions are happening at a dizzying pace. Yesterday Intel agreed to buy Altera, another chipmaker. In recent weeks Charter Communications, a cable-TV firm, bid for Time Warner Cable; Royal Dutch Shell offered to buy BG Group; and Warren Buffett agreed to swallow Kraft Foods. There have been $2.1 trillion of transactions worldwide so far in 2015, matching last year’s pace and a near-record. In some respects the mood remains sober. The motivation for most deals has been cost-cutting; few bids have been hostile. Yet there are two clear signs of excess. Some deals are being financed with queasy amounts of debt: the new Charter-TWC combination will have $66 billion of borrowings. And prices are creeping up. The median deal this year has been priced at 17 times operating profits, calculates Bloomberg. That is 23% higher than the 20-year average and the most stretched valuation since the bubble year of 1999.

– The Economist