Global M&A Passes $1.2 Trillion in 2014 YTD

The Financial Times reported yesterday that to date, 2014 has produced $1.2 trillion worth of global M&A transactions.  This is the largest amount since before the big recession, when in 2007, M&A hit $1.4 trillion over the same time period.

While obviously, much of this volume has been driven by mega transactions valued in the tens of billions, there is application to the middle market as well.  The reason is that the forces driving mega transactions are also driving middle market deals.

1.  Confidence:  Generally, confidence has returned to the markets.  While it has taken most of a decade to return, buyersAcquisitions at a high have been buoyed by large stock market returns and corporate executives are expecting times to get better, not worse.

2.  Interest Rates:  The continuation of low interest rates is making it cheap for companies to borrow money to leverage transactions.

3.  Cash:  Both corporate balance sheets and private equity firms are flush with cash, giving them the ability to react to prime acquisition opportunities.

It has become a seller’s market.  There is a lot of appetite chasing too few good transactions. If you have thought in the past of selling, now is a good time to explore your options.

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