Investment bankers see dealmaking lull storing pent-up demand
By Anirban Sen
NEW YORK (Reuters) -Some of the world's top investment bankers said on Wednesday that a drop in corporate dealmaking in 2023 sets the stage for a pick-up in activity once uncertainty around the global economy, geopolitical conflicts and regulatory hurdles subsides.
Global mergers and acquisitions (M&A) totaled $2 trillion in the first nine months of this year, down 27% from a year ago to their lowest level since 2013, according to LSEG data. This has fueled soul-searching among investment bankers about the prospects for their business.
«CEOs and corporate boards do not need to have a very clear picture of what the future will look like, but they need a degree of stability,» Goldman Sachs Group Inc (NYSE:GS) global M&A co-head Stephan Feldgoise said at a Reuters NEXT conference panel. «I'm reasonably bullish that this will return, but obviously it will be in fits and starts.»
Uncertainty over the Federal Reserve raising interest rates further to fight inflation, the conflicts in the Middle East and Ukraine, concerns about a potential economic slowdown and growing hostility among antitrust regulators to big deals have all weighed on the M&A market.
«You can see why some companies are saying, if I don't have to do this deal now, maybe it is more prudent to wait,» Bank of America chairman of global M&A Steven Baronoff told the panel.
There are green shoots. Last month, oil major Chevron Corp (NYSE:CVX) said it would acquire Hess Corp (NYSE:HES) in a $53 billion deal, less than two weeks after rival Exxon Mobil Corp (NYSE:XOM) said it would buy Pioneer Natural Resources (NYSE:PXD) for $59.5 billion — the two biggest transactions so far this year.
JPMorgan Chase & Co (NYSE:JPM) global M&A head Anu Aiyengar
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