With the total being calculated as $242 billion, US mergers and acquisitions broke dealing records last month, according to the financial software company Dealogic.
Dealogic also found that this figure was higher than the $226 billion spent in May 2007 and the $213 billion in January 2000, both previously known to be the record breaking months for M&As.
The largest transactions that contributed to this record breaking amount were Charter’s three way $90 billion acquisition of Time Warner Cable and Bright House and Avago’s $37 billion acquisition of Broadcom, as the Financial Times reports.
An M&A boom was predicted by various lawyers and banks, alongside Ernst and Young because CEOs are being encouraged to grow their business at a rapid rate by making fast and easy deals.
JPMorgan’s global co-head Chris Ventresca believes that equity markets were aiding the expansion of businesses through M&As when there was a lack of organic growth. “As premiums for deals go up, companies will come under increasing scrutiny and will have to defend the synergies and rationale of deals,” Ventresca said.
However, the acquisitions that have taken place have been financed by shares, cash reserves and bond markets which have seen a triumphant return for debt structures that were in place before the financial crisis in 2008.
It has also been reported that the Federal Reserve plan to increase interest rates which could mean that companies would be more reluctant to acquire businesses that are in debt. Regardless of this, analysts still predict the M&A market to grow because of the demand for fixed-income investments.
Russ Koesterich, chief investment strategist at BlackRock is reported to have a similar attitude. “Short-term rates should rise, but long-term yields are likely to be more anchored over the next one to two years,” Koesterich says.
A total of US$4.88 trillion of debt has been sold so far this year reports Dealogic, close to the level of 2007 when US$4.91 trillion of bonds were issued over the same period.
The German industrial gases group has ended talks with its US peer on a potential union to establish a market leader.
The US exchange said it will introduce incentives from next month to make lower-volume exchange traded funds easier to buy and sell.
A survey of 1,000 merger and acquisition dealmakers finds that seven in 10 expect Brexit uncertainty to limit the number of deals.