Investment market is very large over the world and a lot of different participants are working under this environment. However, there are two core types of investors: retails investors and large investors. Both these types are very important for the financial markets because retails investors provide more liquidity for the markets when institutional investors provide more stability.
They provide more stability because most of them do less market timing. There is no secret that retail investors are the one that they are starting first screaming that bear market is coming and selling all their stocks immediately and otherwise when stocks are rising for a long term and sometimes are at their peaks they starting to buy stocks heavily. However, that is not a really good way to react to the market. The worst thing is that such actions are destabilizing the market and volatility of investment increases. The true is that everybody pays for that increased volatility including institutional investors.
Institutional investors are biggest ones and most of the time they care about stability first. However, finances and investment markets aren't the fields that provide the most stability. Even bonds in real terms after inflation can be not as stable as it looks from the first view. But how it all affects M&A markets?
M&A (mergers and acquisitions) is very known term and this notability comes from the scale of M&A market. It is huge and it is driven by institutional investors. If total investment market is consisted of retail and institutional investors then mergers and acquisitions market is consisted mostly only of institutional investors.
Larger companies are taking over smaller ones consistently and those companies are institutional investors. They affect this market the most. And we cannot say that they act very stable in here, because M&A market is extremely cyclical and is booming together with economy booms. So is natural that institutional investors also may bring instability and that is proofed by M&A market.
