Why 2014 Mergers and Acquisitions Deals Have Topped the Charts

Posted by Admin | November 7th, 2014

As of the end of September 2014, mergers and acquisitions (M&A) deals across the globe have outnumbered the levels of deals we have seen made over the past five years, fueling hopes that ceo confidence can be sustained throughout the remainder of the year and well into 2015.

What Are M&A Deals,  Anyway?

Mergers and acquisitions are a form of corporate financing and strategic management that includes selling, buying, combining and dividing similar entities or companies to help businesses expand. It is a type of business restructuring that aims to promote positive value and growth. Cary Kochman, as the head of North American Mergers and Acquisitions at Citigroup, has completed M&As valued in excess of $300 billion.

The 2014 economy has seen M&A activity in nearly every sector, which is the opposite of what we have been observing over the previous few years. The 2014 M&A boom could suggest a strengthening economy across the board when all is considered.

 So What’s Causing the Uptick in Deals?

This industry-wide M&A activity boom, according to advisers, is a logical outcome of company strategies implemented since the recession. Costs have been cut and consolidation has become a natural means of continuing growth for countless companies.  Goldman Sachs leads in the worldwide M&A ranking this year, followed by Morgan Stanley at number two and Citigroup at number three.

Consolidation begets consolidation by making scale ever large.  So, once that first transaction starts moving along, other transactions follow because there is pressure to step in and take action in the world of M&A. This gets the ball rolling and, so far, its momentum has yet to slow down.

 A Win for Power and Energy

So what types of companies have been involved in this year’s M&A deals? Power and energy companies have had the most value, seeing a 56-percent increase since last year to total $376.2 billion of deals within the past nine months. Another industry seeing record value is healthcare, which has enjoyed its strongest value in M&A transactions since the 1980s.

As of the end of September, M&A activity in 2014 has totaled $1.3 trillion and includes 7,823 proposed deals. That is compared to just $864 billion in all of 2013 and $616 billion in 2012. If this record M&A trend continues, the remainder of this year and next looks strong for future M&A activity.