In the News: M&A’s Coming Back…Just Not Yet
We may be in for one hell of a hot summer, but, according to most of the heads of M&A at top IBs, unfortunately, M&A won’t be feeling the heat. According to JPM head Douglas Braunstein, technical analysis clearly points to a bottoming out and subsequent rebound of M&A activity only after the recession is done and the economy has made strong moves toward a turnaround (as displayed in the past two U.S. recessions).
Others share different reasons or, more aptly, notions, as to why M&A won’t come roaring back this summer, including:
1. Rising unemployment;
2. Poor consumer confidence;
3. Nervous CEOs and Board of Director reluctance;
4. The lack of Private Equity deals/market depth;
5. TARP bankers may push deals off until next year when their hearty bonuses should be less likely to attract a lot of attention; and my favorite
6. July and August are big vacation months and are therefore slow.
What do you think M&A hiring is going to look like in the upcoming future? I’m going to be starting B-school this fall hoping to career switch into tech/telecom M&A next summer.
I think it really depends on not just the state, but the direction and pace of the economy in the next several months. Right now, it looks like things can start picking up by then, and definitely by your FT recruiting the following year. That said, we have all seen the market flop on its butt already over the past year and a half or so (more than once) – it really just depends on whether the economy can get on some solid footing, as opposed to running up a slippery slope – sure if you run fast enough you can get partially up the hill for a few seconds, but you’re going to slip right back down again. I know this doesn’t really answer your question, but no one can really answer it. Simply put, I think it will look better…how much better…that remains to be seen, especially with M&A activity down and trading currently driving a big portion of the banks’ revenues.