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What YGCC is Reading #580
The New Supercycle of M&A
Image adapted from The Economist.
Corporate mega-mergers have surged in 2025, with 32 deals worth a combined $700 billion announced so far and 63 transactions over $10 billion logged globally. Major players, including Union Pacific’s $85 billion bid for Norfolk Southern and a $60 billion showdown for Warner Bros Discovery, are driving the largest deal wave since 2021. Analysis of 117 megadeals from 2010–2020, worth $2.7 trillion, shows mixed performance: median buyers saw 6% annual growth in revenue and operating profit, but return on capital fell by two percentage points. Shareholder outcomes split evenly: outperformers generated $2.8 trillion in excess returns, while underperformers destroyed $2.9 trillion. Research by Bain suggests firms have improved at M&A, with serial acquirers earning 8.5% annual shareholder returns versus 3.7% for infrequent buyers. Yet many 2025 deals remain massive bets on scale, some equaling nearly half the acquirer’s market value, raising questions about due diligence, AI-driven disruption, and whether today’s merger wave will ultimately create or destroy value.
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What metrics should boards use to evaluate whether a deal is truly capability-enhancing rather than merely size-enhancing?
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How will increased consolidation affect pricing power and competitive dynamics in concentrated industries?
Read more from The Economist.