The closest thing finance has to a natural law is that markets are cyclical. Like all human beings, investors tend to extrapolate past experiences into the future. They are also prone to adopting the mood of those around them, be it exuberant or gloomy.
For most people involved in the business of global mergers and acquisitions, last year felt like the top of the cycle. Fuelled by cheap debt, buoyant stock markets and booming demand for commodities, the total volume of deals reached new highs, surpassing even the peaks reached during the stock market bubble of 2000. AT&T’s takeover of BellSouth, the US telecom group, was the biggest deal of the year at $89bn.
