“Last year, companies spent just over $5 trillion buying or merging with other enterprises. That’s up by over a third from 2014, and is almost half a trillion dollars more than the previous record set in 2007” – Quartz
Mergers and acquisitions are easy to ignore if they aren’t happening to the company you work for or the investments you own. They represent shifts in the biggest collections of wealth. M&A activity is always happening, but the scale of the recent record is worth noting relative to previous records: 2000, prior to the crash of the Internet Bubble; and 2007, prior to the Great Recession. One explanation has been that, when companies can’t find better uses of their money to grow their businesses internally, they grow by buying other companies in their industry. While that makes sense financially, it assumes that the growth will continue. It is also, however, a sign of internal stagnation and a reliance on financial machinations rather than the fundamentals of the business’ operations – a worrying sign that has been proved out before. The M&A record doesn’t guarantee a bust, but that is what has happened before.
(Click on the chart for the link.)