2014 Record Breaking Year for M&A

Last year was a record-breaking one for M&A. Global deal-making reached a 7-year high with 40,298 transactions amounting to $3.5 trillion.

With cheap debt financing readily available and stock prices rising, more companies pursued M&A in 2014. The improving U.S. economy greatly contributed to robust activity; at $1.53 trillion, the U.S. accounted for 44% of global M&A activity.

Top industries for M&A worldwide included oil and gas ($409 billion), pharmaceuticals ($210 billion), and cable ($187 billion). In the U.S., energy & power ($338 billion) and healthcare ($237 billion) topped the list, followed by media & entertainment ($208 billion) and high technology ($168 billion), according to Reuters data.

As I noted this past November, CEOs and executives are continuously looking for new ways to grow, including mergers and acquisitions. Most importantly, it seems that CEOs and boards are finally on the same page about M&A.

According to Dealbook, “Corporate boards and management teams have come to realize that their ability to expand their companies on their own has become more difficult. A substantial move, like acquiring a major competitor or complementary business, is now seen as necessary to move the needle.”

Given this spirit of internal cooperation, 2015 is setting out to be a year of robust activity as well.

The first few weeks of 2015 already produced some exciting news in M&A.

Coach has acquired luxury shoe retailer Stuart Weitzman for $574 million as part of its strategy to become an “upscale lifestyle brand.”

Facebook has also acquired wit.ai, a company that makes voice recognition software for wearable devices. Such devices as Apple’s iWatch are the next hot trend in technology as companies like Apple, Google and Facebook compete to connect devices from watches, kitchen appliances and thermostats to the Internet. Watch for more exiting deals in this arena in 2015.

Shire has also agreed to buy NPS Pharmaceuticals for $5.2 billion cash in the first big corporate acquisition of 2015. Last year Shire agreed to sell to AbbVie in deal that would allow U.S.-based AbbVie to reincorporate. However, due to proposed regulatory changes aimed at limiting tax inversions, AbbVie walked away from the deal. This cross-border deal shows the general trend of consolidation in the pharmaceutical industry and that availability of cash due to low interest rates.

Take a look at our infographic for more details on 2014 deal activity. (Click on the image for a closer look.)

Mergers and Acquisitions 2014 Year Review Infographic by Capstone