Trump era ushered in wave of M&A on hope for deregulation and tax reform

  • U.S. M&A deals totalled $1.2 trillion in the year since President Trump was elected.
  • Both in terms of dollar amount and number, it is the most deals for the first year of all modern presidents.
  • Deal making is buoyed by promises of deregulation and tax reform.
President Donald Trump
Kevin Lamarque | Reuters
President Donald Trump

Trump may be the deal-making president in more ways than one.

U.S. merger and acquisition transactions totalled $1.2 trillion since President Trump was elected, according to Thomson Reuters data. That's from nearly 12,700 deals stretching from Nov. 6, 2016 to Nov. 2, 2017.

In terms of dollar amount and number of transactions, that is the most for the first year of all modern presidents.

While the dollar amount was down from the previous year, the number of deals rose overall. Volume has increased steadily since 2011, the data show. Thirteen of the deals in the past year were over $10 billion, also the most of a modern president's first year since election. There were 10 such deals in President Obama's first year and eight under George W. Bush.

Business sentiment has run high since Trump was elected, with investors and companies expecting deregulation, tax reform and protectionist trade policies to fuel economic growth. Unemployment has continued its steady decline, hitting 4.1 percent in October, and GDP growth has picked up, gaining 3.0 percent in the third quarter, according to "advance" estimates released in October.

Investors, too, have reacted to the administration with optimism, pushing all major indexes to record highs multiple times in the past months. The S&P 500 has gained 21 percent since Election Day, the second-best performance under the past six presidents.

More surprising has been the steady climb of the markets. Before the election, many analysts predicted volatile markets under a President Trump, a forecast that has not come to pass. The market has moved an average of 0.35 percent a day over the past year, Thomson Reuters data show. During President Obama's first year, the average index moved 1.47 percent a day.

As CNBC previously reported, Trump's first 100 days in office were the least volatile for the market at least since President Kennedy.

At the same time, there are signs that the Trump administration may use more regulatory muscle than many analysts expected. The Justice Department is planning legal action to halt the pending acquisition of Time Warner by telecom giant AT&T if the government and companies can't agree on a settlement, The Wall Street Journal reported. An AT&T spokesman said it was common practice for "both sides to prepare for all possible scenarios," the Journal reported.

Antitrust officials rarely take action to stop such vertical mergers, but regulators are concerned that AT&T's network combined with Time Warner's media could hurt competition. Trump himself targeted the $85 billion deal during the campaign last year, saying that "it's too much concentration of power in the hands of too few."

Still, there's little shortage of interest in mega deals.

In late October, it was reported that CVS Health was in talks to purchase health insurer Aetna for $200 a share or more, valuing the deal at around $70 billion. That would be the biggest deal in health insurance history, according to Thomson Reuters data. The companies are looking to finalize a transaction as early as December, according to a report.

On Monday, semiconductor firm Broadcom made an unsolicited bid for rival Qualcomm for $70 a share. At a total of $130 billion, including $25 billion in debt, it would be the biggest technology acquisition ever.