Scorching new data out on the volume of deal-making over the last 12 months or so, from Refinitiv courtesy of The Wall Street Journal (“Cash-laden companies are on an M&A Spree”).

Ready for some once-in-a-lifetime-career numbers?:

  • In the first six months of 2021, businesses spent more on mergers & acquisitions involving US companies–$1.74 trillion–than they had in over four decades [when the data series they’re citing was first calculated–Bruce].
  • The comparable figures for the first six months of the last two years were:
    • $1.28 trillion in 2019, or about 30% smaller;
    • and $512 billion in 2020, barely one-quarter as much.
  • The total count of deals “with US involvement” was 9,725, also a new high.

And a voice from the front lines:

“The market is clearly hot,” said Luca Zaramella, the chief financial officer of snack-foods maker Mondelez International Inc., which in May agreed to spend about $2 billion on Chipita SA, a European snacking company. Mondelez plans to finance the transaction with new debt, existing cash and $1 billion it received after selling down part of its stake in Keurig Dr Pepper Inc.

“The cost of capital is pretty compelling,” Mr. Zaramella said. The pandemic delayed the companies’ negotiations. “I feel more comfortable having taken the time,” he said.

You’ve heard me say this before, but it’s always reassuring to have an outsider voice confirmation:

“There has probably never been easier access to capital,” said Brian Salsberg, global head of the integration practice at professional services firm Ernst & Young.

Need we add that SPACs don’t hurt all this musical chairs?  A well informed estimate (Refinitiv’s) of the number of SPACs globally is 500, many of course US-based or with a large proportion of US DNA.

Occam’s Razor would counsel that the simplest explanation is often the best, and here we have it:  Cash is burning holes in people’s pockets:

And we’ll give the last word to someone whose billable hour targets for the year are not, I’m highly confident, under threat:

“You still have a lot of runway for this cycle that we are in,” said Noah Kornblith, a partner at law firm O’Melveny & Myers.

Stepping back, there are actually two types of deals being done and two separate drivers for each.  On one side we have “strategic” acquisitions, almost exclusively performed by F500/Global 1000 corporations for, well, strategic reasons particular to their business; and on the other side we have “financial” M&A, almost entirely the domain of private equity, hedge funds, SPACs, and other varieties of financially engineered programmatic efforts.

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