Lots of cash, cheap debt and board confidence meant 2015 was a record-smashing year for M&A with $3.9 trillion of deals, including AB InBev’s takeover of SABMiller and the Pfizer Allergan merger
It has been a record smashing year for mergers and acquisitions: 2015 has seen the highest ever deal values in the US and in Asia, the first time there has been more than $1 trillion of deals in three consecutive quarters, and broken the global M&A record.
So far this year, $3.9 trillion (£2.57 trillion) of deals have been made, a 6.7 per cent increase from the previous record in 2007, and up 19.5 per cent from 2014, according to Mergermarket data seen by City PM
Deals in the US rose to a record $1.82 trillion, accounting for 46 per cent of the global M&A total and up 29.8 per cent. Asian deals were worth $787.1bn, a 29.8 per cent rise from 2014.
Read more: These are the biggest deals of 2015
The Mergermarket report said the US had done especially well thanks to "strong economic growth coupled with the anticipation of an interest rate rise has resulted in a perfect storm for acquisition finance, with plenty of cheap debt available to fund deals."
It’s been a good year for UK companies too, which accounted for a record 39.4 per cent share of all European deals.
The pharma industry has had a bumper, with a record $558bn of deals, including the Pfizer Allergan deal in November that pushed 2015 in the record books. Consumer, tech, real estate, defence and business services have all seen record deal values this year too.
Mergermarket said there have only ever been five deals worth more than $100bn, and two of them were in 2015: AB InBev’s takeover of SABMiller and the Pfizer Allergan merger. There were nine deals worth more than $50bn this year as well.
“Cash to spend, banks continuing to lend, high board confidence and shareholders pushing for more” drove prices higher in 2015, according to the report, and the trend looks likely to continue into 2016, with a “strong pipeline” for the new year.
Europe is an especially popular destination for US companies looking to depend their hug cash reserves, which Mergermarket attributes to "stringent US tax laws as well as a weakened Euro [which] are driving US companies to invest in Europe, as seen through the high profile Pfizer/Allergan tax inversion deal accounting for 53.5 per cent of the US’s investment into Europe this year."