The Year That Made Deal Makers Giddy

By HEATHER TIMMONS, New York Times:

For deal makers, does it get any better than this?
A heady cocktail of rapidly growing emerging markets, floods of private equity and hedge fund money, buoyant chief executive confidence and a hungry debt market that seems willing to snap up nearly everything that banks can dish out has created an environment so fertile that mergers in 2006 surpassed all records.
Globally, there were $3.79 trillion worth of deals last year, up 38 percent from 2005, according to data from Thomson Financial.
Deals were even up 11 percent from the heights of 2000, the year of the AOL- Time Warner merger that has come to symbolize the dangers of a mergers and acquisitions bubble. Many of the deals of that year left a hangover of bad debt and broken companies.
Records were also broken last year for hostile deals and European deals. Dealogic, a competing statistics firm, says that 2006 deal flow was even higher, at $3.98 trillion.
Gavin MacDonald, head of European mergers and acquisitions at Morgan Stanley, acknowledged that he had “seen a few cycles” in more than 20 years as a banker, but never one like this.
“We thought in 2000 we might not see its like again, but we’ve surpassed even that,” he said.
No one can agree on what happens next.