Worldwide merger and acquisition activity totaled $4.7 trillion last year (a 42% increase over 2014 levels) making 2015 the strongest year for deal-making on record. Therefore in a sellers’ market, many buyers that were previously reluctant to take on pension and post-retirement medical obligations are accepting this additional risk to stay in the game.
Chuck Moritt is Mercer’s North American multinational client leader and co-author of the company’s 2016 report “People Risks in M&A Transactions.” He believes that the fundamental driver of this high level of M&A activity is low economic growth of 2% or 3%. “M&As are one way organizations can demonstrate growth to their shareholders in a low growth environment because they can improve top line revenue and find ways to reduce expenses,” he says.
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