By all accounts, 2015 was a record year for mergers and acquisition (M&A) activities on a global scale as well as for the United States. Volume was up across most sectors, reaching $4.9 million. That far surpasses 2014, which saw M&A volume increase by 47% over 2013. In fact, last year’s activity was the highest since 2007, when M&A activity peaked just before the financial crisis. That raises the question of whether the trend will continue into 2016, or will global economic headwinds dampen the confidence of deal makers?

What Made 2015 the Biggest M&A Year Ever?

2015 was the year of blockbuster deals with more than 10 transactions worth $50 billion or more. The merger of Pfizer and Allergan announced in November is the second-largest M&A deal on record at $191 billion. AB InBev’s acquisition of SABMiller was valued at $120 billion, and Royal Dutch Shell paid $81 billion for BG Group. Cable communications behemoths Charter Communications and Time Warner agreed to a deal worth $78 billion. Chemical giants Dupont and Dow Chemical announced a “merger of equals” for $68 billion. The list goes on.

While the blockbuster deals garner all the headlines, it was the flurry of smaller deals that lifted M&A volumes to record levels. Much of the small business M&A activity centered on smaller health care providers, such as physician and dentist offices, home health care and long-term care facilities. There was also a high level of activity among restaurants, property management firms and business services. A significant increase in loan approval activity by the Small Business Administration (SBA) spurred much of the activity.

The biggest contributing factor to record M&A activity in 2015 is that the conditions had never been better. With historically low interest rates, debt financing has been inexpensive. The slow economic recovery is forcing companies to look to mergers to achieve growth. An increase in consolidation within certain sectors is forcing companies to merge to maintain or grow market share. Finally, the stock market has been very good to companies involved in M&A deals, pushing their stock prices higher whether they are the buy side or the sell side.

Looking to 2016, many analysts believe the conditions are still very good for M&A activity, with some predicting about the same level while others are forecasting accelerated activity. Forecasting M&A activity is typically sector-specific, with some sectors expecting to see an increase and others either no change or a possible decrease. Following is a breakdown of some of the sectors expected to experience an increase in M&A activity in 2016.

Technology, Communications and Media

M&A activity in technology, global communications and media reached a fever pitch in 2015 with more than 3,000 transactions worth $768 billion. With technology companies like Google and Apple sitting on a mountain of cash, M&A activity is expected to remain strong. Driving a lot of the activity is enterprise IT, where companies are responding to the convergence of computing, storage and networking technologies. The technology is moving so quickly that it makes more economic sense to acquire innovators than to build from within.

Emerging technologies such as machine learning and the Internet of Things will continue to drive M&A as companies compete to offer more and better personalized user experiences across desktops, mobile devices and any electronic product that can be Wi-Fi enabled. The semiconductor industry is another area that has seen a lot of consolidation to achieve scale and access to more specialized chip technology.

Established technology companies like IBM, Oracle and Cisco will be left behind unless they step up to the M&A dance. IBM must modernize its capabilities to grow in the cloud-data segment, and Oracle’s customer base is shrinking as more companies are allocating capital toward cloud-data storage and cybersecurity. Cisco has also struggled to keep pace with innovation and must consider acquisitions to remain relevant.

Chemicals

The chemicals industry has been on an M&A tear the last two years, culminating in the mega-deal between DuPont and Dow Chemicals. Many analysts are predicting the trend will continue in 2016. The drive behind M&A activity in the chemical industry is the need for specialization. However, to become a market leader in a specialized segment requires scale and efficiency, which can only occur through consolidation. The momentum in industry consolidation is such that an increasing number of companies will need to seek mergers just to stay competitive.

Financial Services

M&A activity in the financial services sector has been off in recent years, but some analysts expect that to change in 2016. The need for scale and increased efficiency will likely drive M&A activity among insurance companies. Many of the companies that merged for consolidation purposes in the past may now be looking to acquire for expansion purposes. The banking industry is being challenged by new entrants bringing innovative technologies that are changing the way people think about banking, and the emerging fintech industry is moving so quickly that banks don’t have the time to build their own offerings in-house. Banks need to partner with innovators or acquire them just to keep pace. In addition, increasing regulations and costs related to capital management are forcing smaller banks to merge or seek buyers.

Health Care

The total amount of activity in the health care sector has dwarfed other sectors for several years. The volume for health care mergers in 2015 was nearly $400 billion, with many of the transactions occurring between large health care companies and biotech companies. That should continue as the rush to find the next big cure is only accelerating. 2016 could see some blockbuster deals like Pfizer and Allergan, as companies such as Aetna and Anthem look to solidify their positions.

Energy

Aside from a couple of mega-deals last year, M&A activity in the energy sector slowed to a near halt. Analysts expect a spike in activity in 2016 as an increasing number of oil and gas companies struggle to survive under the pressure of low oil prices. Until now, many distressed oil drillers have avoided selling off assets in hopes of a price rebound. But, unless oil prices recover significantly in 2016, more companies will be forced to merge.