Market Overview

Is M&A Activity Indicating The End Of The Bull Market?

Is M&A Activity Indicating The End Of The Bull Market?

A new report by Credit Suisse discusses the ongoing merger and acquisition wave and how prudent traders can use M&A data and news to earn big profits. In the report, analysts explain the implications of M&A activity, not just for the parties involved, but for the overall stock market.

M&A Implications

Analysts believe that the world is still in the upswing of the current global M&A cycle. However, the implications of M&A activity reach far beyond the companies making the moves.

According to the report, M&A activity is a good leading indicator of bull market peaks in the stock market. Cash-financed M&A provides nearly a third of the corporate demand for equities. Once M&A activity reaches its peak, the stock market typically peaks about eight months later.

Related Link: 11 Buyout Targets Credit Suisse Is Watching

Is M&A Activity Close To A Peak?

During each of the equity market peaks in 1987, 1990, 1998, 2000 and 2007, the value of M&A activity as a percentage of market cap has been at least 8.4 percent. The current number sits at just 4.6 percent.

Over the past 15 years, buybacks have accounted for about twice as much cash returned to shareholders as acquisitions have, numbers not typically indicative of an M&A peak.

How To Play

According to the report, the prime time to own acquiring companies (not the companies being acquired) is one to three months following the announcement of the deal.

Telecom acquirers have provided the largest returns, whereas consumer staples and utilities acquirers have provided the worst returns.

Materials and IT buyout targets have historically been purchased at the highest premiums. Analysts also note a “curious positive correlation between premium paid and outperformance” in these two sectors.

Posted-In: Credit SuisseAnalyst Color M&A Analyst Ratings Best of Benzinga


Related Articles

View Comments and Join the Discussion!

Latest Ratings

PNRJefferiesInitiates Coverage On
IPHIBank of AmericaMaintains80.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Citi Likes Windstream & New CS&L REIT Spin

Waste Management, Commodity Price Burden And The Efficiency Need