Bloomberg reports that, although it's been a good year for M&A in 2005, 2006 will be even better, and investment banks might earn as much as $18bn in fees from advising on deals.
According to Bloomberg data, M&A activity is up some 36% this year, to around $2.3 trillion, $1.1 trillion-worth of which took place in the US, and $999bn in Europe. This figure could increase to a staggering $3bn in 2006, putting next year on a par with 2000, which saw M&A at a record high.
The likely increase in deal activity is put down to a number of factors, including better corporate earnings, record cash flows accruing to US companies, deal-hungry private equity firms and more corporate clarity around the strategic direction of businesses.
Anthony Burgess, Deutsche Bank's European Head of M&A is also predicting that we will see an increase in large deals in 2006, with perhaps up to 6 transactions coming in above $25bn.