end?

It’s a question that dealmakers, who make millions advising on transactions, don’t

like to ponder too often.

Since 2014, more than $20tn worth of deals have been reached in over 250,000 transactions.

There are a few big picture reasons why dealmaking has thrived.

Low interest rates make for cheaper borrowing.

Rising stock prices that allow for equity to be used in deals.

Economic growth that hasn’t necessarily translated into earnings growth.

And most importantly, a stable geopolitical backdrop.

Those are the conditions under which corporate executives tend to feel the most confident

about buying or merging with another company.

That is why you always hear dealmakers talking about boardroom confidence as a leading indicator

of M&A activity.

The gains over the past years have survived unexpected geopolitical events.

That includes Britain’s vote to exit the European Union in 2016, and later, the election

of Donald Trump to president of the United States.

Each has affected M&A in its own way.

The prospect of Brexit has forced UK companies to prepare for the economic impact of Britain’s

potential withdrawal from the EU.

The boom in outbound Chinese dealmaking, which took place in the first stretch of the M&A

wave has come crashing down with Donald Trump’s trade war against China.

China has responded by combining state-owned companies to create national champions of

the future.

But despite a few short-lived slowdowns in activity, the blockbuster deals keep coming.

That is particularly the case in the US, which unlike Europe, keeps pumping out megadeals.

One thing that could bring this deal party to an end is a recession.

This would have a big negative impact on transactions.

After all, stability is probably the most important ingredient for dealmaking.

Think about it this way, nobody wants to buy at the top of the market, just before valuations

collapse.