M&A activity flirts with record in November

About $200 billion worth of mergers and acquisitions (M&A) have been announced in November, according to Dealogic, putting the month on track to be the second-biggest month for activity since the company started collecting data in 1995.

With the year winding down, the increase in activity is continuing a theme that started toward the end of 2016. Chunsken Chan, the head of M&A at Dealogic noted that at the end of 2016, deal activity accelerated with companies driven to conclude deals before interest rates increased.

There are numerous reasons why companies pursue mergers and acquisitions but the general theme is for cost savings or business expansion. Many times when two companies merge they generate “economies of scale” which result in lower overall costs.

M&A activity has flourished in November and there have been some very big deals in 2017, including Amazon’s (NYSE:AMZN) purchase of Whole Foods Market, Cisco’s (NASDAQ:CSCO) purchase of Broadsoft and United Technologies’ (NYSE:UTX) purchase of Rockwell Collins (NYSE:COL).

With 2017 coming to a close and M&A activity accelerating, is this a glimpse into 2018? According to Deloitte’s M&A trends report, corporate and private equity executives expect M&A activity will increase in both value and number in 2018.

Almost 70% of executives at US-headquartered corporations and 76% of leaders at domestic-based private equity firms say deal flow will increase in the next 12 months, while there was uniform sentiment that deal size will stay the same or increase in 2018 versus 2017.