Global M&A activity this past year was extremely busy. The Burger King/Tim Hortons deal was Canada’s biggest at US $13.2 billion but it certainly wasn’t alone.
According to Thomson Reuters the global M&A market hit $3.5 trillion in 2014, up 47% from the prior year. Interestingly, the volume of deals barely budged up just 6% year-over-year.
What drove the M&A market this past year were the number of big deals, which are defined as those greater than $5 billion. In 2014 there were 95 of these humongous transactions with the U.S. capturing a fair share of the action at $1.53 trillion, up 51% year-over-year.
Can you say M and A? The investment banks surely can.
Back home in Canada it was the Americans taking a good chunk of the M&A advisory business. Royal Bank, which usually wins the title for most advisory dollars actually came third in 2014 followed by both JPMorgan and Goldman Sachs. In total Canadian M&A activity came to a very vibrant $229 billion, up 45% year-over-year, and higher than it’s been since 2007.
Goldman Sachs, the top dog in this year’s hunt, was the advisor on $61.6 billion in transactions followed very closely by Jamie Dimon’s company at $61.3 billion. Globally, Goldman Sachs was the big cheese advising on just less than $1 trillion or 30% of the M&A transactions worldwide. With numbers like these it’s not surprising it took the global title for the fifth consecutive year.
So why should advisors care about this?
Because 77% of the deals were cross-border in nature like the burger/coffee combo that was completed in December. The odds are good that more of these deals are going to happen with the Canadian dollar poised to either flat line or head lower in 2015.
2014 was the year of the deal. Like a broken record 2015 should produce a similar result.
The only problem?
Knowing which stocks to buy. Restaurant and media seem like two good sectors but we’ll leave that to financial advisors to figure out.