Could 2021-2022 be strong years for IB?
Could 2021-2022 be strong years for IB? My thinking is because right now there is continuous low deal flow for the next several months as the market is down and there is uncertainty over the coronavirus, owners who may want to sell are are waiting to see what happens. Next year, we'll know how much this virus is going to affect us, people are going to start going out again and spending money, and businesses with cash may take advantage of markets still being lower than they were at the beginning of this year. Maybe this is why Citi gave 100% FT offers and why other strong banks may continue with the regular 80-90% return offer rate.
Orrrrrr this pandemic leads to a global recession that will last a longtime because there aren’t any monetary policies at this point that can help recover (even if fed printers go brrrrr) thereforr deal flows are pretty much gone as firms are hunkering down until they see growth
See? Noone knows, even major economists and the fed don’t know whats going to happen H2 of 2020 how would college students/interns know anytjing about deal flow next year
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The industry is dead? Is that what they told you at your corporate strategy internship?
value of M&A deals in 2019? less than 2007? - yes Look at the number of IPOs over time? - a lot less now - even before covid So you can shoot me down on this forum all you want, and not welcome unpopular opinions - the numbers don't lie
My corp strategy internship might not - but my research for my honors thesis at my 'top target' did
On the contrary the effects of this will be noticeable for the next 3-5 years at minimum as consumer spending won't return to pre covid levels, unemployment and lost salaries are going to screw millions, until there is a vaccine or an antibiotic that dramatically reduces the effects of the disease there are still precautions that are necessary, M&A activity won't have enough companies to do business as multiple industries will get fucked @retail boys and multiple companies will collapse as well as the potential for a complete change in the ways that buisness operate for instance there could be significantly less interest in taking up large sums of debt in order to avoid going bankrupt in case a disease like this occurs in the future. I think the view that somehow we will be able to bounce back as if nothing happened is a false narrative that is stemming from the flaws of human psychology. This doesn't mean that everything will be a complete nightmare and banks will start to reduce headcount by 80-90% and pay is slashed to 90k all in with no chance of a bonus but you're kidding yourself if you think the average consumers are going to rack up debt as they did previously. This virus can easily lead to less consumption and greater savings as the healthcare system and inequality has now been exposed on a national level. No one knows anything and can't predict the effects but I would advise against being overly optimistic.
Lower consumption in short run => greater savings. Greater savings => greater investment. Greater investment => increase in capital stock. Increase in capital stock => increase in steady state growth rate. Increase in steady state growth rate => increased consumption in long run across entire economy. There's some basic macro for all you finance majors out there. Is the industry dead? I have a hunch that it's not. Things always smooth out in the long run, and IB is essential for raising and deploying the capital stock from a high level view of the economy.
Thanks Mr. Intermediate Macro. Why don't you ask those who filed 26m jobless claims in the United States how their savings account is looking? That $1,200 stimulus check sure makes one want to invest more in the long run! Companies must be falling over themselves building up inventory right now.
Agreed with @Steveeee above. In the long run, things will play out fine. Right now, it’s too early to tell what will happen. One thing for certain is that some industries (example: transportation/ aviation) will go through consolidation so those are the right areas to be in for IB over the next couple years.
EVR is expecting a strong rebound in large cap M&A, Schlosstein spoke at length about this on their earnings call this week
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