M&A Waves in the U.S. Market: An Empirical Analysis of Market Sentiment, Financing Conditions, and Sectoral Dynamics

This thesis examines the determinants of merger and acquisition (M&A) waves in the United States from 1999 to 2023, focusing on the role of market sentiment, financing conditions, and sectoral dynamics. While classical theories link M&A waves to industrial shocks or managerial motives, this study emphasizes the misvaluation hypothesis, which suggests that equity market conditions and the use of stock as acquisition currency are central drivers of merger activity. The empirical analysis uses a dataset of large, completed U.S. transactions from Refinitiv LSEG, combined with external macro-financial indicators such as sectoral EV/EBITDA multiples, S&P 500 performance, Treasury yields. Data were aggregated quarterly to construct measures of deal value, deal count, financing structure, and sectoral composition. Regression results show that higher market valuations and stock market performance are associated with increased M&A activity, while rising financing costs reduce it. The share of cash-financed deals is negatively related to deal volumes, consistent with the prevalence of stock-based acquisitions during periods of market optimism. Sectoral evidence highlights the disproportionate role of technology and healthcare in shaping merger waves.