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June 3, 2015

Blog: U.S. M&A Market is Red Hot. But Will it Last?

The U.S. M&A market continues to rocket forward in 2015, and shows no signs of slowing. According to the Financial Times, U.S. dealmaking hit an all-time high in May with $243 billion in activity. Huge transactions, such as Charter Communications’ $90 billion acquisition of Time Warner Cable and Bright House, were prevalent during the record month.

The rise in M&A activity is attributable to several factors. Many companies are seeking to grow via acquisition, while organic growth has slowed. In addition, cheap debt fueled by low interest rates has made funding widely available. Low cost of capital, and high equity prices, have helped drive prices up as well. Indeed, as deals have surged, so have deal premiums.

All of this deal activity is set against a backdrop of middling economic growth. Just last week, first quarter GDP growth was revised down to -0.7%. This is down significantly from expectations of 2% to 3% growth that many expected at the start of the year. But if corporate M&A activity is any indication of corporate executives’ confidence in the economy’s future prospects (it is, typically, a good indicator), then perhaps the economy just hit a soft patch, rather than experiencing a hard landing. Rather than hunkering down, corporations are stepping up to pursue opportunities and spend cash to fuel growth.

We will be watching closely to see if these trends continue. As hard as it is to believe, we’re less than a month away from the end of Q2 2015. Our Transaction Services team stands ready to help buyers and sellers pursue deals and maximize the value of assets, so if you are in the market please reach out to one of our professionals to discuss your objectives. Make sure to follow us regularly on Twitter, LinkedIn and Facebook, for more information and insights about the current M&A market environment.