JPMorgan's Crystal Ball

Fewer mega-mergers, more cross-border deals in 2016.

It's happening. M&A is losing its oomph. 

"Less mega-deals, more mid-size deals" is what JPMorgan Chase is seeing this year, said Marianne Lake, the bank's chief financial officer, speaking on an earnings call Thursday.

It shouldn't be too surprising that the mega-merger spree of 2015 wasn't sustainable. Industries from cable and telecom to pharma and beer have now consolidated to the point that there are few super-sized matchups left. 

Big Bucks

More than 50 companies made acquisitions exceeding $10 billion last year. The biggest deals were made by Pfizer, Anheuser-Busch InBev, Shell, Charter, Dow and Dell -- none of which have closed yet.

Source: Bloomberg

That doesn't mean it won't still be a busy year; it just may be a tad less exciting than last year's wild ride. If you've already forgotten: Companies all over the world struck $3.8 trillion of mergers and acquisitions, and some were massive. Add that to all the joint ventures, spinoffs and big investments that also took place, and total deal volume came to $4.3 trillion. Both figures are records.

M&A Environment

The U.S. stock market is off to a rocky start this year, which can damp deal activity.

Source: Bloomberg

By the way, JPMorgan advised on more than $1 trillion of last year's transactions, capturing third place on the adviser league table behind Goldman Sachs and Morgan Stanley, according to data compiled by Bloomberg. The bank said Thursday that while the pipeline is good and "dialogues are pretty active," market volatility can hurt CEO confidence. The S&P 500 has lost about 6 percent this year, and every sector is down except for utilities. 

Keep in mind that 2015 was somewhat of an anomaly, and M&A goes through cycles. JPMorgan hinted at more cross-border deals and a pickup in Europe, for example, versus the high volume of U.S. domestic mergers last year. Cross-border mergers did climb to an eight-year high of about $1.5 trillion in 2015.

Follow the Money

The U.S. was at the heart of the 2015 merger boom. Here's where the capital flowed:

Source: Bloomberg

And while it may feel like dealmaking is off to a slow start, the roughly $36 billion takeover of Baxalta announced by Shire last week makes this year already busier than 2015 was at the same point in time. In fact, this is the biggest ramp-up in dollar terms since January 2000, which was when Time Warner and AOL initiated their gigantic mess merger. And actually AOL-Time Warner serves as a great reminder of why big deals aren't always a good thing anyhow. 

    This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

    To contact the author of this story:
    Tara Lachapelle in New York at

    To contact the editor responsible for this story:
    Beth Williams at

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