The following article was written by The Street's sister website, The Deal, which covers the M&A industry. Click here to see more.
U.S. mergers and acquisitions jumped 38% in the first 10 months of the year, to $1.3 trillion, from a year earlier, according to data from Dealogic. That's likely to make 2014 the strongest year for deals since the 2008 financial crisis.
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"To a certain extent, there has been pent up demand," says Mark Shafir, co-head of Global M&A at Citigroup. "With interest rates where they are and a generally improving economy, you would have thought we would have seen more deal activity already. But it seems like 2014 is where it really came to fruition."
The improving macro picture seemed to give corporate executives a jolt of confidence about doing deals this year.
"Fundamentally I think what changed -- and I'm not sure when -- but confidence crept into the board room," says Jim Frawley, U.S. head of M&A Macquarie Capital (USA).
Global M&A -- involving deals with a minimum value of $100 million--jumped 59% during the first nine months, to $2.1 trillion, according to The Deal's data.
The number of deals increased only 8% during the period, a sign that so-called megadeals have returned.
"The big deals, the transformational deals, above $10 billion have really been the driver -- for a whole host of reasons," Citi's Shafir says.
Megadeals spanned several sectors and included a host of cross-border M&A and tax inversions. The impetus was part tax-breaks, part cheap currency and part search for expedited growth.
Inversion deals-or transactions by U.S.-based companies seeking to reincorporate in lower-tax countries-made headlines throughout the year. But classic cross-border mergers also climbed as companies sought opportunities for expansion.
Drug makers and healthcare companies contributed to eight deals and $80.6 billion in tax inversions through the end of October, Dealogic data shows. That compares with just four deals and $53 billion a year earlier.
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