Banks Seek Top Dealmakers to Boost M&A Teams
Mergers and acquisitions have surpassed last year’s record total of $3.55 trillion. Bloomberg reports that October was the busiest month in the past three with $262 billion in deals. A recent study finds that companies are picking up the slack as private-equity firms remain constrained by rising borrowing costs. “There is a big turn back to corporates and they are clearly looking to make acquisitions. Private equity isn’t going away but is less competitive because of the increased cost of capital,” Henrik Aslaksen, Co-Head of Mergers in Europe at Deutsche Bank AG in London told Bloomberg. According to Dow Jones Financial News, bankers believe M&A activity, which has hit record levels in Europe, will remain healthy for the next 18 months. As a result, executive search firm, A.E. Feldman, says banks will compete to attract and retain the talent necessary to execute existing deals and generate new ones.
Technology companies have ramped up their M&A spending, and new data from research and analysis firm, The 451 Group, shows that it’s just the beginning. In a survey of corporate development professionals at companies that collectively have spent more than $150 billion to acquire nearly 500 targets in the past five years, more than 80% of those polled said they planned to maintain or increase their level of M&A in the next year.
The survey also shows that strategic acquirers (companies, as opposed to investment firms) have spent nearly $156 billion to acquire technology companies so far this year. That’s a nearly 80% increase from the $87 billion they spent a year ago. In the past six weeks total spending by strategic buyers also jumped $32 billion, almost triple the $12.6 billion spent in the same period last year.
And there are no signs of a slowdown. About half of survey respondents say the debt shakeout will increase opportunities for strategic buyers. More than 85% of corporate development professionals at actively acquiring companies say they expect to maintain or increase M&A activity in the next year. In contrast, less than 10% of the respondents expect their acquisition volume to decline.
Goldman Sachs Group generated $1.4 billion in third-quarter revenue for advising on mergers, more than double the amount from a year ago, according to Bloomberg. Merrill Lynch also counted on M&A activity to generate $1.8 billion in fees. And Dow Jones Financial News reports that bankers believe M&A activity will remain healthy for the next 18 months, driven largely by cash-rich corporates. This means M&A opportunities are growing as banks compete to attract the staff necessary to execute existing deals and generate new ones in the coming months.
