Global M&A hits record $3.37 trillion

By Mark McSherry

NEW YORK (Reuters) - The value of global mergers and acquisitions for 2006 has reached an all-time high of $3.368 trillion, beating the previous record of $3.332 trillion in 2000, research firm Dealogic said on Thursday.

The merger boom has been driven by low interest rates, gains in stock markets, liberal credit markets and strong chief executive confidence, bankers said at this week's Reuters Investment Banking Summit in New York.

Also fueling the M&A market have been private equity funds, also known as financial sponsors, which have raised more than $300 billion in new funding this year, according to research by Private Equity Intelligence.

Dealogic said financial sponsor M&A buyout volume has reached a record $563.2 billion in 2006, accounting for 17 percent of all global merger activity. That compares to only $118.4 billion and 4 percent of deal value in 2000.

"I have always believed that CEO confidence is perhaps the greatest driver of M&A activity," said Mark Davis, managing director at boutique investment bank Gleacher Partners, at the Reuters summit.

"To me right now, CEO confidence is extraordinarily high -- and I don't see any signs of that abating."

Also, high-yield bond investors have been snapping up new debt issues at a record pace this year, helping private equity firms finance some of the largest buyouts in history.

EUROPE STORMS AHEAD  Continued...