Is the economy on the cusp of a buyout boom?

After years of hibernation, the mergers market is seeing a burst of activity

Traders on the floor of the New York Stock exchange earlier this month.
(Image credit: Spencer Platt/Getty Images)

With a spate of blockbuster mergers and acquisitions in recent days, analysts far and wide are proclaiming the dawn of a new age of mega-buyouts. On Thursday alone, $40 billion worth of deals were announced, including the purchase of Heinz by Berkshire Hathaway and 3G, and the merger of American Airlines and US Airways. That followed a $24 billion private takeover of Dell, a $16 billion acquisition of British cable business Virgin Media by Liberty Global, and an agreement for Comcast to take sole ownership of NBCUniversal in an $18 billion deal with General Electric. Overall, $160 billion worth of M&A transactions have taken place since January, the hottest start to a year since 2005.

The burst of activity recalled the heady days that directly preceded the financial crisis, when private equity groups leveraged vast sums of borrowed money to buy companies left and right. Since then, however, the M&A market has been largely moribund, with cautious companies laying low and banks withdrawing their credit lines. Are we now headed toward a buyout boom?

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