Has the M&A party passed its peak?


This month is Wall Street’s bonus season, and for the ranks of bankers working on M & A, it’s about as good as it gets.

The record boom in trading activity last year has led to great profits for bankers.Investment banks Announced bonus increase Ranges from 20 to 49 percent behind record rates.It’s the Hamptons property, fine wine, and Non-substitutable token Art happy.

However, the mood between M & A bunkers has been a bit more cautious since the turn of the year. Some people ask questions personally. Have you passed the peak of the trading boom that started more than 10 years ago?

“Toppings in 2021 have always been difficult,” a prominent rainmaker told me.Almost behind the record Transactions worth $ 6 trillion The investment banks agreed last year generated $ 157 billion in fees, including $ 47 billion just for merger and acquisition advice. Both pricing levels have been the highest since Refinitiv began collecting data about them over 20 years ago.

This year, with ultra-low interest rates, a booming stock market, and unprecedented government support across the economy, the long run is to make it easier to buy rivals, diversify businesses, or catch up with the digital economy more than ever. I finished it. The stock prices of boutique advisors such as PJT Partners, Moelis and Evercore have more than doubled in the last decade.

But now, stock market volatility associated with rising inflation and monetary tightening is creating uncertainty. Indeed, if many of the M & A boom conditions are partially reversed, trading should be slowed down.

Well, it may not be that easy.Bankers who are bankers are bullish on record, especially the chiefs of listed companies Boutique company Specializes in M ​​& A and restructuring advisory services.

Evercore CEO Ralph Schlosstein recently said that maintaining a good M & A environment was due to strong stock markets, debt availability, and some visibility into economic direction. They all come together to support the trust of the CEO. “We now have all of this,” he said in a recent investor presentation hosted by Goldman Sachs.

Paul Taubman, CEO of PJT Partners, also told investors recently that even if interest rates rise significantly, the true impetus for M & A is another factor and will not have a dramatic impact on closing deals. Said.

“It is this incredible transformation seen around the world that drives M & A activities,” says Taubman. “You have this tendency to digitize, but it’s not slowing down. It’s just speeding up … It’s trending to decarbonize. It’s trending to electrify. Companies relocate their businesses. There are a lot of macro trends that need to be done. “

Some other bankers who asked to talk about the background said the current volatility of the market is likely to hurt closings for some time. But they also added that when the valuation goes down, trillions of dollars of private-equity groups with cash-rich companies and uninvested fund “dry powder” are likely to return to the trading table.

“Currently, most of the transactions I’m working on have been suspended because sellers and buyers are having a hard time finding a pricing agreement as the company’s stock price continues to skyrocket. I have hope, “said the prominent rainmaker. “We manage and overcome Covid’s crisis.”

It is unlikely that it will move the M & A market Special purpose companyThe Wall Street phenomenon of the last 18 months is due to a slight setback after a series of scandals and disastrous performances. “The number of Spacs on the market will drop to pre-pandemic levels if no one cares,” said how many, including companies listed as shells in 2020 and 2021 and then finding targets for the merger. The banker who worked on the deal said. When.

Investors are wary of bold M & As during uncertain times, and no big deals have been given. Unilever shares fell sharply following news of a £ 50bn offer to acquire GSK’s consumer healthcare business.

Anu Aiyengar, Global Co-Head of M & A at JP Morgan, said:

But the true damper of the deal is likely to come from Washington, where a new generation of antitrust officials appointed by the Biden administration is determined to revolutionize the rulebook.

Jonathan Kanter, Head of Antitrust Division, US Department of Justice, Said this week His office will prevent more anti-competitive transactions, rather than looking for complex remedies that protect consumers and reduce market power for a particular company too often. .. Microsoft’s $ 75 billion acquisition deal with game giant Activision could test regulators’ willingness to show that the new watchdog means business.


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