No reason to fear M&A

M&A is making a comeback, but analysts are confident the market will not see a repeat of the mega-acquisitive and ultimately destructive strategies of the previous decade. Now the watchword seems to be ‘conservative’ M&A. Laurence Neville reports

After a number of false starts, it is now clear that US merger and acquisition activity is heating up. Figures from Thomson Financial show that in the first two months of the year, $202 billion worth of deals were announced—around $20 billion higher than the same period last year, but still half of the record total announced during the first two months of 2000.

Increases in activity can become self-fulfilling. In sectors such as telecom and retail, mega-deals tend to force a consolidation