Search
 

Why This M&A Boom Is Different

Merger and acquisition activity in 2014 was reminiscent of 2008, but theres reason to believe this boom is more sustainable for the long run.

By Tom McGee | Updated on January 05, 2015
The value of merger and acquisition (M&A) transactions worldwide reached an estimated US$1.8 trillion in the first half of 2014. Deloitte’s “M&A Trends Report 2014” found that experts expect deal activity to sustain or increase that momentum through 2016. The last time M&A activity peaked, it ran straight into the 2008 economic crisis. Now that it’s peaking again, are we watching a rerun? Or something more sustainable?

Without question, people feel there’s money to be made. And this time, it may remain that way for a period of time. There are three key differences between the run-up of 2007 and the run-up of 2014: the way participants share risk, the sophistication of financial due diligence, and the surrounding macro conditions. Taken together—and absent a significant geopolitical event that disrupts world markets—these factors suggest that today’s M&A boom may be more sustainable than its predecessor.

In It Together

Some M&A transactions rely entirely on stock. Others are purely cash-based. Either way, there’s an imbalance in implied risk, which can inhibit the parties’ commitment to generating value. The structural benefit of a mixed cash-and-stock deal is that it balances the load: Buyers and sellers share in both the risk and the incentives to make the deal work.

Today stocks are trading at near-record highs and debt financing is both available and cheap. That gives companies flexibility in managing their capital structures, as well as in meeting a seller’s specific interests when doing deals that have not always been available to them. And indeed, recent trends show the market moving away from all-cash deals. They represented half of all acquisitions by publicly listed buyers in the five years through 2013, according to Bloomberg. In the second quarter of 2013, they made up two-thirds of the takeovers. But a year later, the all-cash share of the M&A picture was down to one-third.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2025 ALM Global, LLC. All Rights Reserved.