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Corporate dealmaking is staging an this year.

This week alone, Capital One to acquire Discover for $35 billion, Truist Financial announced a $15.5 billion sale of its insurance arm, and Walmart to buy TV maker Vizio for $2.3 billion.

The trio of transactions, worth a combined $53 billion, have lifted the value of deals announced worldwide this year to $425 billion — a 55% increase from the same period in 2023, .

That’s a stark contrast from the past two years. Global deal values from more than $5 trillion in 2021 to less than $3 trillion in 2023, and volumes slid 17% to 55,000 deals, .

Megadeals were hit especially hard. Transactions worth more than $5 billion plunged 60%, from nearly 150 deals in 2021 to fewer than 60 last year, LSE Group found.

Mergers and acquisitions, initial public offerings (IPOs), and other types of deals in 2022 and 2023 because central banks’ inflation-fighting increases to interest rates .

A muted first half for stocks, , increased regulatory scrutiny, concerns of a US debt default, and the breakout of a second war also fueled uncertainty and flattened valuations.

Lofty valuations

This year’s deal bonanza reflects a . Stocks are trading near-record highs, giving companies a powerful currency for dealmaking.

Lofty valuations also encourage selling, and many buyers like to bet on assets that are climbing in price in the hope of capturing future gains.

Meanwhile, the Federal Reserve and other central banks have rates have probably peaked and are likely to drop this year, lowering borrowing costs and reducing the risk of recession.

Many companies are in good shape with strong cash flows and balance sheets, meaning they can afford to make acquisitions. There’s also pent-demand for deals after a couple of lean years, particularly among businesses that are eager to go public or are running short of money, seeking to expand, or looking to cut costs.

Moreover, private equity firms are to cash out the increased value of their assets and deliver a return to their backers.

Still, it’s far from a cloudless sky for aspiring dealmakers. Potential headwinds include stubborn inflation, a , escalating armed conflicts, regulatory crackdowns, and uncertainty over this year’s presidential election.