Mergers and acquisitions this year will beat the record set in 2007, with the boom set to continue through 2017, according to Blackstone Group LP’s John Studzinski.
“I think you’re going to see a record amount of M&A activity beyond 2007 this year, next year, and potentially the year after,” Studzinski, 59, said in an interview with Bloomberg Television, naming the telecommunications, healthcare and energy industries as most likely to see more deals.
Global M&A volumes this year are on track to pass $3 trillion for the first time since 2007, according to data compiled by Bloomberg. More than 11,000 deals worth a total of $1.5 trillion have been agreed, including Royal Dutch Shell Plc’s $79 billion acquisition of BG Group Plc, and Charter Communications Inc.’s purchase of Time Warner Cable Inc., also worth about $79 billion.
The “extraordinary amount of cash on balance sheets” will help drive more transactions, Studzinski said, adding that deals are gaining popularity among confident company boards and management now that “no shareholders want cash” in the form of share buybacks.
The increased influence of activist investment funds on companies’ corporate strategy is also contributing to dealmaking, according to Studzinski.
Shareholders have been “taught by the activist community - - the Bill Ackmans and the Dan Loebs,” he said. “For the first time they see the merits of M&A now. But remember, activists only support M&A that is focused on the core strategy and not diversification.”