After glut of corporate mergers, now the hard part

This year's unprecedented M&A activity has been characterized in many ways. It's been labeled a wave, a boom, a frenzy, a mania, a flood.

"Glut" may prove most accurate.

Corporations spent $3.7 trillion on mergers and acquisitions, more than any other time in history. That should send investment bankers over the moon. (Speaking of which: If you were to stack $3.7 trillion in dollar bills, it would reach the moon.)

Acquirers paid dearly this year (especially for U.S. assets), which is what may put 2015's deal spree into potentially treacherous territory.

It's ironic, because while Republican presidential candidate Carly Fiorina was being skewered on stage and in newspapers for her value-destructive dealmaking as the former head of Hewlett-Packard, plenty of CEOs were pursuing risky acquisitions as big or bigger than the $25 billion takeover of Compaq Computer that she led in 2001. In fact, some of this year's transactions make that one look bite-size.

For some buyers - such as Pfizer, Anheuser-Busch InBev and Dell - these mega-mergers were done almost out of necessity, in the sense that there are few other avenues that can produce the pace of sales and earnings expansion investors expect (not to mention tax savings). Companies with $50 billion-plus market values need something that will move the needle. Doing enormous deals is a kind of last resort.

But never before have so many happened at once, which is why this year ends on a mixed note. The good news is that companies are being held accountable to shareholders like never before, and so they're being proactive when it comes to things like not missing out on consolidation sweeping through their industries.

At the same time, stocks are already a little volatile, so if some of these extra-large transactions hit rough patches, it could be bad for the market. And we know goodwill is piling up, which is usually a sign that acquirers are overpaying. Historically, big mergers haven't worked out well for this reason. And that's resulted in writing off asset values, reducing earnings (on paper, at least), and dragging down share prices. And remember, a good chunk of this year's takeovers were stock deals.

Regardless, the bankers win. They profit when they put together the deal, and they profit when the company has to unwind it (e.g., ConAgra).

Investment banks generated more than $26 billion in fees for M&A transactions this year, the most since 2008, according to an estimate by Freeman & Co. based on deals globally. And that's only for the ones that have closed; a third haven't yet, data compiled by Bloomberg show.

At the start of the year, Warren Buffett critiqued the "banking fraternity" for a cycle in which advisers pitch mergers, then urge their undoing, and later suggest reacquiring the business - for a premium. It's "prompted the saying that fees too often lead to transactions rather than transactions leading to fees," he wrote.

We'll see if he's right. Meantime, tune in tomorrow, to see how Gadfly graded the biggest deals.