What The Relationship Between M&A And S&P Does Not Tell Us

Everyone wants to know when M&A activity is likely to pick up. But any forecast of the timing of recovery depends on the analyst's basic assumption on whether M&A leads stock market activity or stock market activity leads M&A. Many analysts are predicting an impending recovery in M&A flows, based on what happened in the 2002 recession, when the S&P 500 led M&A, with the S&P index bottoming out in Q3 2002 and M&A activity bottoming out two quarters later in Q1 2003.

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