Feb. 15 - U.S. merger and acquisition activity is at its highest level since 2007, thanks to cheap cash, a soaring stock market, and economic confidence. Bobbi Rebell reports.
A rising stock market and cheap money are emboldening U.S. CEO's to go after big deals. So far in 2013: $158 billion of deals. that's more than double the same period as last year according to Thomson Reuters Deals Intelligence. U.S. dealmaking contributed to a 16.5 percent rise in worldwide M&A volume. That makes it the highest level since 2007. Assistant Professor Saikat Chaudhuri of the Wharton School at the University of Pennsylvania: SOUNDBITE: SAIKAT CHAUDHURI, ASSISTANT PROFESSOR OF MANAGEMENT, THE WHARTON SCHOOL, UNIVERSITY OF PENNSYLVANIA (ENGLISH) SAYING: "I think that is a an indication of things improving in the economy or at least a perceptions about the future being positive. And it certainly becomes an important tool, an important financing tool for firms, and that is why we also see that firms are using stock to also finance transactions in addition to cash and they feel confident about the future." The Presidential election is behind us, and the fiscal cliff is no longer an imminent threat. And earnings have been solid- driving a stock market that has started the year with stellar returns. Plimsoll Mark Capital's Jim Awad: SOUNDBITE: JIM AWAD, CHAIRMAN, PLIMSOLL MARK CAPITAL (ENGLISH) SAYING: "The merger phenomenon is supportive of stocks. #1 because it reduces the amount of stocks outstanding because companies get taken over. It lifts the other stocks in the industry where a company has been acquired because people immediately say well who else in the industry can now be acquired and also it shows that executives have confidence. that they have enough confidence in the economy and the financial markets to step forward and make financial bets, and that instills confidence in investors. " Looking forward, momentum is expected to keep up through 2013. SOUNDBITE: SAIKAT CHAUDHURI, ASSISTANT PROFESSOR OF MANAGEMENT, THE WHARTON SCHOOL, UNIVERSITY OF PENNSYLVANIA (ENGLISH) SAYING: "Expect that financial investors will be active because they are sitting on a lot of cash. I expect leading firms in industries being very active especially buying those who are still struggling. I also expect the technology sector given that technological change is continuing unabated to be active, cross border activity to take place as well." One potential headwind to watch: as the stock market rises, potential targets get more expensive- which could slow the drive to make deals.