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M&A Heads to Record $5 Trillion Year Despite, Well, Everything

Low rates and abundant cash help explain the dealmaking boom. But don’t ignore psychology.

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Illustration: Aisha Franz for Bloomberg Businessweek
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It’s been a big year for deals. There’s the planned merger of AT&T’s media businesses with Discovery, the high-stakes takeover battle for railroad Kansas City Southern, and Square’s agreement to acquire the Australian “buy-now, pay-later” company Afterpay. Despite PayPal Holdings Inc. ruling out a potential acquisition of social media company Pinterest Inc. for now, global deals could top $4.1 trillion this year, breaking the record set in 2007. By the end of 2021, transactions could easily top $5 trillion.

That’s all the more exceptional considering all the reasons not to make a deal. The pandemic is still raging, the global economy is volatile, and the U.S. and Europe are signaling a tougher approach to antitrust. The business of buying and selling companies traditionally depends on a belief that things are, if not entirely rosy, at least predictably benign. And yet companies seem prepared to swagger through the uncertainty. “We’re not seeing the momentum slowing down in any way,” says Elizabeth Crain, chief operating officer of investment bank Moelis & Co. “The fundamental factors that have been driving M&A for the last 12 months continue.”