The world’s dealmakers are roughly US$1 trillion down in one of the worst years for takeovers and stock market listings in a decade.
That is the year-on-year drop in the value of mergers and acquisitions (M&As) and initial public offerings (IPOs) in the first half of the year, a period in which inflationary pressures, financing constraints and geopolitical tensions nixed activity across regions and sectors.
With the traditional summer lull on the doorstep, and fears of a recession lingering, the next six months could bring more pain on Wall Street, where banks have already been slashing bonuses and jobs in response to the slump.
Photo: Reuters/Lam Yik
“Deals are being delayed,” said Dominic Lester, head of investment banking for Europe, the Middle East and Africa at Jefferies Financial Group Inc. “Boards are having difficulty valuing assets, and are therefore taking longer to commit to transactions.”
Deal volumes are down 42 percent year-on-year at US$1.3 trillion, according to data compiled by Bloomberg. Excluding COVID-impacted 2020, that is the smallest first-half total in a decade and below the average for the period.
“Many investment banks have constrained their ability to provide debt financing, and alternative sources of debt financing are quite expensive by comparison,” Lester said.
In the past six weeks, tens of billions of dollars’ of M&As have either stalled or collapsed, ranging from the US$10 billion tie-up of satellite operators SES SA and Intelsat SA to Citigroup Inc’s US$7 billion sale of its Mexican unit. Other pending deals, including Microsoft Corp’s US$69 billion takeover of games maker Activision Blizzard Inc, face being scorched by antitrust authorities.
Meanwhile, new market listings have improved little, with companies raising just US$68 billion via IPOs in the first six months, Bloomberg-compiled data show.
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