Deal Makers Notched Nearly $3.5 Trillion Worth in ’14, Best in 7 Years

By almost every measure, 2014 was a time for deal makers to pop the corks of their Champagne bottles.

The year was one of the best for mergers and acquisitions since the passing of the financial crisis. Some 40,298 transactions — worth nearly $3.5 trillion — were announced worldwide in 2014, according to Thomson Reuters, fulfilling the hopes of an industry that has bet on such a resurgence for some time. It was the biggest year in deals since 2007.

Many of the factors responsible for the rebound in mergers activity since the tumult of 2008 have existed for years. Debt financing is cheap and plentiful, and stock prices have climbed steadily, giving corporate buyers a more valuable currency to offer potential targets.

Perhaps the biggest change, deal makers say, is that 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.

And with some semblance of predictability having descended upon the markets — the Standard & Poor’s 500-stock index rose 11.4 percent last year, with only a few bouts of heart-stopping volatility — boards feel more comfortable taking the plunge.

A Resurgence in Deal-Making

There was a boom in corporate mergers last year, with deals in energy and health care leading the way.

MERGERS AND ACQUISITIONS

Quarterly activity

Market share, 4th qtr. 2014

Rest of world

$546.4

billion

59%

U.S.

$373.0

billion

41%

$1.5

trillion

Worldwide

1.0

TOTAL

0.5

$919.4

billion

U.S.

0

’00

’02

’04

’06

’08

’10

’12

’14

2014 through 4th quarter, in billions

WORLDWIDE DEALS BY INDUSTRY

Oil and

gas

Health care equipment

and supplies

Pharmaceuticals

Cable

Nonresidential

Total $3.482 trillion

72 other industries: $1.819 trillion

$409

210

187

163

111

106

103

95

95

93

92

Food and

beverage

Telecommunications

services

Banks

Power

Chemicals

Other real estate

2014 through 4th quarter: worldwide mergers and acquisitions

TOP FINANCIAL ADVISERS

2014 RANK BY REGION

 

RANK

NUMBER

OF DEALS

MARKET

SHARE*

FIRM

 

VALUE, IN BILLIONS

’14

’13

U.S.

EUROPE

ASIA

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

1

3

2

4

8

5

10

7

9

6

13

14

17

18

21

Goldman Sachs

Morgan Stanley

JPMorgan

Bank of America Merrill Lynch

Citigroup

Barclays

Lazard

Deutsche Bank

Credit Suisse

UBS

Rothschild

Centerview Partners

BNP Paribas

RBC Capital Markets

Jefferies

446

354

328

259

298

259

258

241

243

181

300

44

130

151

135

$1,009

749

744

730

681

583

472

427

408

283

230

213

160

125

121

29

22

21

21

20

17

14

12

12

8

7

6

5

4

4

%

1

5

3

2

4

6

7

10

8

12

19

9

14

11

1

2

3

5

6

8

7

4

10

12

9

18

11

24

2

1

5

3

4

12

11

9

13

8

17

11

 

2014 through 4th quarter: worldwide mergers and acquisitions

TOP LEGAL ADVISERS

RANK

NUMBER

OF DEALS

MARKET

SHARE*

RANK

U.S.

FIRM

 

VALUE, IN BILLIONS

’14

’13

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

7

25

4

16

13

1

3

14

2

5

6

19

22

21

17

 

Skadden

Cleary Gottlieb Steen & Hamilton

Weil Gotshal & Manges

Sullivan & Cromwell

Freshfields Bruckhaus Deringer

Davis Polk & Wardwell

Wachtell Lipton Rosen & Katz

White & Case

Simpson Thacher & Bartlett

Latham & Watkins

Jones Day

Cravath Swaine & Moore

Shearman & Sterling

Allen & Overy

Linklaters

239

99

214

116

230

164

104

211

165

342

439

71

140

215

236

$516

419

414

398

397

380

366

334

332

330

286

228

227

221

208

15

12

12

11

11

11

11

10

10

10

8

7

7

6

6

%

1

3

2

5

21

6

4

8

10

7

9

11

14

Change in rank:

All figures through Dec. 30, except quarterly activity, through Dec. 15.

*Multiple firms are usually involved in each transaction. †Rank is lower than 25th.

5 to 10 places;

11 or more.

MERGERS AND ACQUISITIONS

Quarterly activity

$1.5

trillion

Worldwide

1.0

0.5

U.S.

0

’00

’02

’04

’06

’08

’10

’12

’14

Market share, 4th qtr. 2014

Rest of world

$546.4 billion

59%

U.S.

$373.0 billion

41%

TOTAL

$919.4

billion

TOP FINANCIAL ADVISERS

2014 through 4th quarter: worldwide M & A

 

VALUE, IN

BILLIONS

RANK

NUMBER

OF DEALS

FIRM

 

’14

’13

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

1

3

2

4

8

5

10

7

9

6

13

14

17

18

21

Goldman Sachs

Morgan Stanley

JPMorgan

Bank of America ML

Citigroup

Barclays

Lazard

Deutsche Bank

Credit Suisse

UBS

Rothschild

Centerview Partners

BNP Paribas

RBC Capital Markets

Jefferies

446

354

328

259

298

259

258

241

243

181

300

44

130

151

135

$1,009

749

744

730

681

583

472

427

408

283

230

213

160

125

121

TOP LEGAL ADVISERS

2014 through 4th quarter: worldwide M & A

 

VALUE, IN

BILLIONS

RANK

NUMBER

OF DEALS

FIRM

 

’14

’13

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

7

25

4

16

13

1

3

14

2

5

6

19

22

21

17

 

Skadden

Cleary Gottlieb Steen

Weil Gotshal & Manges

Sullivan & Cromwell

Freshfields Bruckhaus

Davis Polk & Wardwell

Wachtell Lipton Rosen

White & Case

Simpson Thacher

Latham & Watkins

Jones Day

Cravath Swaine

Shearman & Sterling

Allen & Overy

Linklaters

239

99

214

116

230

164

104

211

165

342

439

71

140

215

236

$516

419

414

398

397

380

366

334

332

330

286

228

227

221

208

Change in rank:

All figures through Dec. 30, except quarterly activity,

through Dec. 15. *Multiple firms are usually involved in

each transaction. †Rank is lower than 25th.

5 to 10 places;

11 or more.

Investors have also supported more aggressive growth measures. The stock prices of acquirers continued on average to rise, indicating that shareholders backed those transactions.

“The large equity institutions are giving companies the benefit of the doubt in this market,” said Peter A. Weinberg, a co-founder of the boutique investment bank Perella Weinberg Partners. “This opens up a range of possibilities beyond the default use of capital, which is repurchasing stock. If shareholders say ‘stay still,’ it’s very difficult to do anything bold.”

The busiest sectors for the year have been the oil and gas industry, with 11.7 percent of the merger market and $409 billion worth of transactions, and the pharmaceuticals industry, with 6 percent market share and $210 billion worth of deals.

Yet the biggest deals of the year, including the assumption of debt, have been game-changing takeovers in the telecommunications industry. Comcast has bid for a nationwide footprint with its $45 billion proposal to buy Time Warner Cable, while AT&T hopes to gain greater scale by buying DirecTV in a deal valued at $49 billion.

The question now is whether the confluence of factors that enabled the merger revival will carry over into 2015 . Corporate advisers contend that investors have shown a remarkable ability to cope with a surge of headline-grabbing news, like the flare-ups in Ukraine and the Middle East and the Ebola outbreak.

And the possibility of the Federal Reserve’s raising interest rates has been well telegraphed and factored into companies’ decision-making.

Not even the plummeting of oil prices has dented the enthusiasm of would-be buyers. Indeed, leveraged buyout executives — who have been left out of the deal feeding frenzy, outbid by strategic buyers — have been salivating at the prospect of new acquisition targets.

“There’s comfort with the new normal, postcrisis,” Mr. Weinberg said. “C.E.O.s and boards know there’s always going to be uncertainty.”