Short Term Trading Weekend Lounge 11-13th Dec, page-83

Totally off topic, but some interesting data I've just come across regarding global M&A. It's a well known fact that M&A activity peaks towards market tops, and in particular the amount of "mega deals" going on.

I read about the Du Pont - Dow Chemicals merger that's just been announced and couldn't help but think this could be another sign of a frothy/toppy market. Some interesting graphs below support this thesis, IMO:

M&A value nearing the level seen at the previous 2 peaks in the U.S.:


China M&A activity the most "extreme" from the bunch of data I looked at. Disaster in motion, IMO (and not good for Aussie):

Europe is still depressed relative to U.S., which fits the macro narrative. Once Europe sorts it's affairs out (could be a while yet) it's likely to have better growth prospects than the U.S., contrary to popular belief (IMO):

Digging deeper into sector specific M&A activity, it's no surprise that IT consulting and services sector is seeing activity just shy of the peak of the .com bubble. SAS businesses are all the rage at the moment, as we all know. Toppy - I'd say yes:


It's also no surprise to see the biotech and pharma sectors with record levels of M&A, given all the shell activity in the sector over the last year or two. Frothy - I'd say no doubt:


A sector we aren't big on in Aussie, so the fact the chemicals industry M&A activity surprised me somewhat. Interested me because of my holding in AJX, due to list in the U.S. sometime soon:

Consumer products sector also seeing record levels of M&A which suprised me, considering consumer spending growth has been muted for years. My guess is this is the main way companies are now lookign to grow their bottom line:


Anyway, I'm no expert in the M&A field, so mainly just observations, but very interesting non-the-less.

Looking in hindsight seems to show that identifying area's of under or over activity in the M&A space can help identify both frothy and unloved (see value) sectors. The website I'm getting my data from can be found here for anyone interesting - there's plenty more graphs with some really good data to plow through.