Global M&A, lending falls off a cliff after logging record years, as investment banks prepare for the new normal with slimmed-down teams.
Hi. I'm Aaron Weinman. Today will be my final dispatch as the author of 10 Things on Wall Street. I'm absolutely gutted to be leaving, but after nearly 11 years abroad, I've decided to head back to Australia. But you're in good hands — my Insider colleagues will be leading the newsletter from here.
Alas, the show must go on. With a new quarter about to start, the numbers from the third quarter looked pretty bleak.
Global M&A deal values reached about $2.7 trillion for the first nine months of 2022, down 34% for the same period last year, according to data from Refinitiv.
Cross-border M&A was down nearly 40% for the first three quarters, while private-equity-backed buyouts dipped roughly 26%, the data showed.
The slump in deals has led banks to trim workforces and reduce their expenses.
Let's do this one last time.
1. Deal values, and volumes, slumped for the first nine months of the year. Persistently high inflation, economic uncertainty, and increased borrowing costs have made it tougher for companies to stomach debt, and many have held off from moving ahead with mergers and acquisitions.
Globally, the number of M&A deals fell to 39,250 from January through September, down 18% from 48,045 in 2021, Refinitiv data showed.
Cross-border deals reached 11,753 for the first nine months of 2022, down 12% from last year's 13,385 transactions. And in private-equity land, sponsor-backed buyouts fell 27% to 8,348 from 11,503, the data showed.
Debt capital markets also turned bearish last quarter, and lending took a hit, according to Maria Dikeos, the head of global loan contributions for Refinitiv.
US syndicated loan volumes hit $1.8 trillion for the first three quarters, down 15% year-over-year.
Companies are tightening their purse strings in a bid to ride out the market volatility. Industries from big tech to Wall Street have conducted rounds of job cuts to trim their expenses, and shore up their balance sheets ahead of potentially more choppy economic conditions.
To be sure, global M&A is still ahead of 2020's first three quarters — roughly $2.17 trillion worth of deals were completed during that time — and only slightly behind the $2.8 trillion in deals that were completed during the first nine months of 2019.
While the slowdown is notable, it's important to remember that 2021 was a record year for M&A, capital-markets dealmaking, and private equity, which is still sitting on trillions of dollars of unused capital.
In other news:
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7. UBS's U-turn on acquiring WealthFront followed pressure from shareholders and US regulators, reported SonntagsZeitung of Switzerland, citing unidentified bank sources, according to Reuters. The Swiss bank and US robo-advisor announced in September that they had agreed to terminate the $1.4 billion deal.
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