Source: UNCTAD. (in millions of current USD)
Mergers and acquisitions (M&A) are a strategy used by firms to expand globally. Since M&A are also financial transactions requiring large amounts of capital, they are linked with boom and bust phases that commonly characterize the financial sector. After a phase of quick expansion lasting about 5 years, there is a retrenchment phase as the profitability of the accumulated investments is assessed. Fast growth in capital investment is commonly associated with misallocations in projects and assets with limited or no profitability.