FP Dealmakers: Rise in people 'just walking away' from transactions as M&A flow slows in first half

financialpost.com:

Tom Redekopp, managing director of the business law group at Dentons in Toronto, knew there was a seismic shift underway in mergers and acquisitions traffic when deals started abruptly falling apart midstream earlier this year.

Rather than the usual pace of one deal per year stalling out, transactions were suddenly being abandoned on a monthly basis.

“I think it’s like four deals dying in the last four months,” Redekopp said. The cross-border M&A specialist said factors such as rising interest rates and turbulent earnings were in some cases combining to change the acquirer’s mind.

“People are either putting the deal on hold indefinitely or just walking away.”

The slower deal flow is spilling over into a tough market for financings, with the total number of debt and equity deals down 16.3 per cent to 468 and the amount raised down 14.3 per cent to $254.7 billion in the first half of the year as compared to last year, according to tallies compiled by Financial Post Data. Corporate debt deals raised just $149.8 billion, down 19 per cent from the same period last year.

There were no preferred equity deals at all, while structured product equity deals fell by 55.6 per cent to just eight deals, with value cratering by two-thirds to $268.71 million.

“It’s been a quiet deal environment for really the last 12 months,” said Trevor Gardner, co-head of Canadian investment banking at RBC Capital Markets.

“I’m speaking in aggregate in most of the measures that we have for our business. So whether you look at announced M&A, whether you’re looking at equity financing, debt financing, most indicators have us down year over year or down over recent periods — but you’ve got to acknowledge 2021 was (an) extremely high level of activity.”

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