Mergers Have Slowed, but a Wave of Deals Could Be Coming
Deal making appears to be taking a breather rather than a full stop, according to bankers speaking at the Milken Institute Global Conference this past week.
Deal making isn’t dead yet.
Wall Street has seen a slowdown in merger-and-acquisition activity this year following 2021’s surge, but deal making appears to be taking a breather rather than a full stop, according to bankers speaking at the Milken Institute Global Conference this past week. In fact, as businesses are eager to protect their supply chains, a ramp up of mergers may be on the horizon.
“Supply chain is the most important topic in companies,” Drew Goldman, global head of investment banking coverage and advisory at Deutsche Bank DBK –1.44% , said Tuesday, remarking on the motivations for deals. “Right now it’s more essential: What is it I need to secure my business?”
Still, it would be hard to deny that the urge to merge has been tempered. Deal count was down by 10% in the first quarter, according to Dealogic. Rising interest rates make financing deals less attractive, while market volatility makes it difficult for buyers and sellers to agree on prices.
But companies don’t want to wait too long before looking to merge, since supply-chain issues and the need to digitize aren’t going away regardless of the gyrations in markets and interest rates. Bankers expect to see a pickup in activity in the back half of the year, when there’s ideally a little more clarity around geopolitical issues.
“Companies don’t want to wait two years to execute on a transaction,” says Steven Geller, managing director and global co-head of M&A, investment banking, and capital markets at Credit Suisse CSGN –1.01% . “You don’t want to be looking into 2025 when your ecosystems are being disrupted quickly by technology.”