U.S. M&A volume is down 27 percent year-to-date, according to Dealogic data, though it has passed $1 trillion for the third straight year, the first time that has happened since the bubble years of 1998-2000.

Burning A Hole In Your Pocket

While it is indeed a good thing to be an investor in a company which gets a bid, the general picture of the results is of a giant exercise in value destruction, despite deals being universally praised by their own authors and generally lauded by analysts in the investment banking industry.

Besides deal size, which presumably is a marker for unwise aggression and optimism by management, it is notable that cash deals tend to outperform those funded more highly with stock.

This is not hard to explain. If you look back to the dotcom bubble, or even at some tech deals recently, there can be a tendency for managers to feel less constrained in paying up for target companies when the market is placing a rich valuation on their own stock. The post-merger underperformance may reflect a lack of price discipline by executives in bubble-type industries, or more simply the tendency of their stocks to eventually return to earth.

It is easier to spend money using a credit card as opposed to paying cash.

Ironically, a surfeit of cash can tempt a company into making unwise or badly priced acquisitions as well. Companies in the acquisition sample showing the most cash on balance sheet prior to the deals underperformed substantially afterwards; by 8.6 percent over one year and 10.1 percent over three years.

Again, it is hard to disentangle what exactly may be happening with cash-rich companies. Certainly the "cash burns a hole in your pocket" effect may be in play, as may be valuation effects, as companies which are doing well and piling up cash could see the buying power increased by expanding price/earnings multiples.

As ever, it probably makes sense to look at the inevitable conflicts between what is in the best interests of managers and shareholders. Buying companies is fun, and empire building brings with it the potential for an expanded compensation package to go along with expanded assets to manage. That this usually doesn't work so well over three or five years is a hard message for your typical over-confident CEO to hear and accept.

As for shareholders, the best strategy may be if it is not your company getting bought it should be you selling anyway.