Merger and acquisition activity for the first half of 2014 has increased dramatically compared with last year and tops all records since 2007, according to Mergermarket, a resource and research organization for the financial industry.
For the first half of the year, mergers and acquisitions valued at more than $1.5 trillion took place worldwide, compared with the first half of 2013, when deals totaled $1 trillion, and the second half of 2013, when they were at $1.2 trillion, says Mergermarket. It was the most active first half of a year since 2007, when the worldwide total was more than $2 trillion, it added.
In the second quarter of this year, mergers and acquisitions reached $945 billion, nearly double the 2013 second quarter total of $555 billion, making the second quarter of 2014 the highest valued quarter since the second quarter of 2007.
The United States experienced the largest increase in mergers and acquisitions from last year. The U.S. saw a 44.2 percent share of the global market by deal value during the first half of the year, compared to its 34.8 percent share in the first half of last year. Merger and acquisition activity in the United States increased to $694.6 billion for the first half of this year, compared with $534.3 billion in the first half of last year.
The pharmaceutical, medical and biotech industry saw more deals than any industry with $258.6 billion, which was a 16.5 percent share of global mergers and acquisitions. The deal value was 52 percent higher than the total for the entire year last year for the pharmaceutical, medical and biotech industry.
The global average deal size was $408.8 million in the first half of 2014, the highest half-year value since 2001. The inflated average deal size follows a surge in mega-deals, deals of more than $10 billion, Mergermarket says. Eighteen mega-deals valued at $476.5 billion account for 30.3 percent of the market.
“The increase in mergers and acquisitions is an indication that people are feeling better about the global economy and about the regulatory environment,” says Kevin Nafziger, North America financial services editor for Mergermarket. “We also have seen an increase in hostile takeovers, which means CEOs are feeling confident enough to take risks.”
Nafziger says there are several reasons the trend should continue.
“In this low interest-rate environment, it is easier for companies to borrow; there is a lot of cash on companies’ balance sheets, and there is a lack of economic and political threats in most of the world,” he says. “There are some political hotspots, but not enough to shake the confidence of executives in the economy.”
The increase is a worldwide phenomenon, but mergers and acquisitions in the United States are driving it, he says.