The total deals reached a high in 2007 which was the year the stock market peaked and when the recession started. If valuations are high and the economy is about to crater, no matter where a firm puts the money, it will look like a poor investment in a few years. It seems more rational to return the capital to shareholders through dividends and buybacks instead of making an expensive acquisition, which can cause a company to take on excessive leverage that would devastate it during a recession. When acquisitions are made, the cost savings, commonly referred to as “synergies”, are often overly inflated, especially when the businesses aren't similar. Shareholders can correctly criticize an acquisition if they think it could have been cheaper to get into that new line of business and grow a product organically. A shareholder can't rationally get mad at a company for buybacks since if you own the stock, you must think it is undervalued which means buybacks make sense – otherwise, you would sell the stock. Stock buybacks are also the tax efficient way to return capital to shareholders compared to dividends which are not tax efficient.