Power Play: Why acquisitions will decline

Traders work on the floor of the New York Stock Exchange (NYSE) on July 27, 2015 in New York City.
Getty Images
Traders work on the floor of the New York Stock Exchange (NYSE) on July 27, 2015 in New York City.

Mergers and acquisitions soared in the second quarter, nearly matching the record set in Q2 of 2007.

But Neil Hennessy, chief investment officer of Hennessy Funds and portfolio manager of the Morningstar 5-star rated Hennessy Cornerstone Mid Cap 30 Fund tells CNBC's "Power Lunch" on Monday acquisitions will continue, but not at the same pace.

Read MoreCorporate matchmakers cash in on M&A boom

"They are a lot more expensive than six years ago so there will be fewer of them," Hennessy said.

He believes that at some point businesses will have to slow the stock buybacks and 25 percent increase in dividends.

"I think you will see the S&P 500 companies start using the $4 trillion in cash they are sitting on to start expanding their businesses," Hennessy said.