Wolf Street: Is Merger-Mania October the Classic Paroxysm before it All Comes Unglued?

October was merger-mania month with a pre-election surge during the waning days: five of the largest 11 US-focused Mergers & Acquisitions in 2016 were announced in the last 10 days of October, including two that broke all-time industry records.

The mania was topped off by two big announcements on Monday:

GE’s $25-billion acquisition of Baker Hughes. Since 2008, the M&A-meister, financial engineering specialist, and industrial powerhouse has gobbled up 51 companies of $1 billion or more in value.
CenturyLink’s $24-billion acquisition of Level 3 Communications.
In the prior days, three big deals made investment bankers salivate:

AT&T’s $85.7-billion deal to acquire Time Warner, announced on October 22, the hugest deal in the history of media, even huger than the prior hugest media deal ever, the AOL Time Warner deal that ended as a spectacular success along with the rest of the mania at the time. But Wall Street instantly refuted what everyone had been thinking from the very first moment, that this was most decidedly and in fact, doubtlessly, not the next AOL Time Warner.
Qualcomm’s $39.2-billion acquisition of NXP Semiconductors, announced October 27, the biggest deal in the history of the semiconductor industry.
British American Tobacco’s $46.9-billion acquisition of Reynolds American - the 57.8% it didn’t already own - announced on October 21.
This pushed US deal volume in October to $330.3 billion, the second highest month on record, after July’s $332.3 billion! And this comes after the all-time record year 2015.
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And then there’s the lag time between the record-breaking mega merger data that blows a hole into the ship, and the sinking of the ship. The lag could be a year or longer.

For example, last time: Private equity firms KKR, TPG Capital, and Goldman Sachs Capital Partners announced in February 2007 that they would acquire the Texas utility TXU; the deal became final in October 2007. It was the biggest, most leveraged, craziest buyout ever, and it would ultimately collapse into bankruptcy. With hindsight, it was the final deal-making paroxysm. The stock market turned south the moment the deal became final, at first in a very casual manner. It took another 11 months before Lehman imploded and all heck broke lose.

Ya might want to read the whole thing.