Easy money, hunger for market share and increasingly open borders for global business have driven companies worldwide to pursue deals in the most heated mergers and acquisition year ever. The M&A fervor this year was underscored again Friday when Dow Chemical and DuPont agreed to combine operations in a $68.6 billion deal, the 18th largest merger on record.
M&A activity was at its previous peak in 2007. The global economic crisis, which came a year later, dampened that appetite for deals. Yet, a gradual-but-steady economic recovery has emboldened companies and their advisers in recent years. The dollar value of all deals that were struck worldwide in 2015 so far totals $4.8 trillion, up 30% from last year and exceeding the previous high of $4.6 trillion in 2007, according to data from research firm Dealogic.
“With Corporate America on the hunt for high-quality assets, 2015 turned out to be a solid year for deals,” says Neil Dhar, a deals partner at PwC. “Long-standing competitors combined for increased scale and domination while others placed big, bold bets on deals that helped them stay relevant in the face of new disruptive forces.” Interest rates have been low for several years now, and companies, with the global economy generally stable, haven’t been shy about tapping their credit lines or the bond market. Some of the largest acquisitions involve cross-border transactions, reflecting the ease with which multinationals pursue attractive assets without being overly concerned about regulatory conditions.
Acquisitions have always been a quick way to boost growth and expand market share, says Richard Peterson of S&P Capital IQ. Not surprisingly, U.S. companies, facing a rosier economic outlook than their competitors in Asia and Europe, led deal-making worldwide. Domestic mergers and acquisitions jumped 53% this year to $2.4 trillion, about half of all deals, according to Dealogic.