The credit binge has ended in a messy, Winehouse-esque stint in rehab. Will the M&A party avoid the same inelegant demise?
Perhaps. But after reaching $4,500bn in 2007, topping the record year posted in 2006, even an orderly and well-mannered slowdown in deal activity relies on certain groups keeping up momentum in 2008.
Corporate buyers - Deal Journal thinks that they finished the year well in the US – not just doing deals, but taking advantage of the absence of all that private equity jostling to pin down transactions well received by the market. And the evaporation of private equity deal-making in the fourth quarter of last year means that needs to continue over the next 12 months. Despite racking up 19.5 per cent of total M&A volume in 2007, according to Thomson Financial, in the fourth quarter private equity’s contribution fell to 9 per cent, the lowest since the first quarter of 2004.- The mid-market – only one private equity deal over $5bn announced since July, compared to 32 for the first seven months of the year, putting a severe dent in activity in the upper echelons. But Private Equity Analyst argues here that the US mid-market could even be set for an uptick in 2008.
- ROW – it wasn’t a record year everywhere in 2007 for M&A. While European activity rose 36 per cent on 2006, deal-making in the US rose just 9.4 per cent in the year, failing to surpass the all-time record set in 2000. US deals accounted for 36 per cent of worldwide volume compared to 41 per cent the previous year. With its ailing economic outlook, and higher private equity penetration, the US may have another more muted year in 2008, although some are betting the weak dollar may entice foreign purchasers to go shopping stateside. Inbound volumes increased 91.9 per cent in the year, compared to 2006.
Goldman Sachs – dull, but probably true. The bank has topped the fee table yet again both globally and in the US, emerged largely unscathed by the credit implosion, and remains one of the few institutions where staff aren’t angst-ridden about their bonuses and their jobs.