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As we have reported, the value of mergers and acquisitions that companies announced during the first nine months of this year is down 34 percent during the same period in 2021, according to data service Refinitiv.
Therefore, the M&A activity that soared and hit a record high last year as a result of record low interest rates, will continue to slow down as central banks raise them.
This year’s plunge is the second deepest on record, behind only the 42-percent drop-off in 2009 in the pit of the Great Recession.
Last year, corporations around the world raked in $12.1 trillion in cash by issuing stock, selling bonds, and private borrowing, as we reported in “Corporations Pocket $12.1 Trillion in Cash in 2021” (11 Jan 2022), funding a record buying spree.
The M&A slowdown will continue until U.S. interest rates fall to the 1.5 percent range. See, “M&A Activity Plunging” (9 Aug 2022). And while M&A activity will continue to slow as interest rates move higher, the deeper the economy falls and the lower asset prices fall, the more companies the “Bigs” will buy up… at cheaper prices.