Record Mergers in 2018: History Has Ominous Suggestion

2018 is on pace for a record number of mergers. A look at prior merger peaks suggests this is not a good thing.

History Lesson

Cross Border Deals Total $1 Trillion Despite Tariffs

Economic Hangover

  • In 1989, deal-making topped out at $558 billion. By July of 1990, though, a recession had set in.
  • Companies announced acquisitions worth a then-record $3.4 trillion in 2000, and within three months the dot-com bubble had burst and the United States economy had fallen into recession.
  • Seven years later, merger activity hit another record, topping $4.1 trillion, but the economy had already slipped into recession as the year came to a close.

Will it be different this time?

Mike "Mish" Shedlock

WorldCom/MCI, AOL/Time Warner...which will be the one that tips the boat this time?

Sadly most small startups are groomed to be takeover targets, not stand-alone companies. But no matter, even during the IPO frenzy of the late 1990s most of the companies might as well have been subsidiaries of Kleiner Perkins.

Fewer and fewer companies all the time. There hasn’t been 5,000 tickers trading publicly since what, 2005? Thirteen years since there has actually existed the so called (Total Market) Wilshire 5000.

Now go ahead and lop off a trillion USD$ in retired equity via share buybacks and you get an increasingly smaller stock market. With so much less to analyze, will stock pickers finally have their day?