Monster Deals, Big Questions

On Nov. 23, when drugmaking giants Pfizer and Allergan agreed to combine, in a deal worth $183.7 billion, 2015 gained the distinction of becoming a record year for mergers and acquisitions. The Big Pharma deal, by far the year’s largest, pushed 2015 past the $3.4 trillion mark in global M&A value set in 2007, just before the financial crisis. That beat the previous record, set in 2000, which also came right before the economy fell into recession, pulled down by the dot-com collapse.

A flurry of corporate dealmaking is “a classic late-cycle development,” says David Rosenberg, chief economist at Gluskin Sheff, a Toronto money manager. “When companies embark on peak M&A activity, it is more often than not coinciding with a peak in the stock market and, dare I say, a peak in the business cycle. Companies are telling us they can no longer grow organically.” The dollar value of deals in 2015 through Dec. 21 was $3.8 trillion.