False dawns in M&A land. Harsh Macro realities extinguish optimism for the global economy

Increased Mergers and Acquisitions (M&A) activity is often regarded as the harbinger of broader macro-economic trends. Rising numbers and values of M&A deals frequently precede more general improvements in economic conditions, and are associated with rising incomes, wealth and prosperity. With the above in mind this paper provides an initial investigation of the 2014-16 surge in announced M&A activity.

The authors outline the distinctive characteristics of 2014-16 M&A activity, notably the significant role of mega-deals (defined as US$10bn plus), the unusually low level of deal completions and the concentration of the expansion of activity in a very narrow range of sectors. They suggest some possible explanations for the surge in M&A and why it has lost its ‘leading indicator status’, apparently becoming disconnected from economic condi­tions and trends, and consider what this might mean for the general understanding of M&A.

Dr Andrew Black & Professor Chris Dixon, GPI Policy Paper, October 12, 2016


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