What does the business of M&A booming indicate?

 It is reported that the global M&A (merger and acquisition) business is increasing for the fourth straight year and worldwide mergers and acquisitions have exceeded $3tn. This may indicate the worldwide market is potentially becoming more uncompetitive since companies are growing larger and the number of companies in one market becomes smaller.

It means the market power of the supply side becomes greater. It could mean that companies tend to get higher and higher revenues in general. This is good news for shareholders and employees that higher revenues mean greater stock returns and higher wages. Moreover, it can have the influence on the market price level. When the supply side has greater market power, they are likely to set higher prices. Additionally, when people receive higher incomes from greater stock returns and higher wages, they tend to consume more and have higher living standards. Both households' and companies' sides add more inflationary pressure on the economy. Therefore, the inflation rate will be higher when the companies' market power increase. Furthermore, the business of M&A booming indicates the financial market is more active in this sector, financial companies could generate profits from the business.

To conclude, the M&A business booming may indicate great inflationary pressure and increased market power of the supply side. Moreover, the prices could become stickier due to the lower level of market competition.