Work at a large MM bank that operates globally. Seeing M&A activity down 30% to 40% YoY - anyone else seeing this? Particularly slow in Europe, but also seeing almost -25% in the US.
Management team openly said we’re headed into a recession based on their deal activity. Having said that, we’re still having trouble bringing on and retaining talent, so no layoffs are imminent.
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Yeah things just slowed down overnight. All of a sudden I’m struggling to find things to do during the day.
Same. Feels great.
I'm averaging 15 hours a day Monday to Thursday as a VP so my sector hasn't slowed. It's really the worst of both worlds; bonus will be capped because of overall bank performance but we still get worked very hard.
Feeling this as well. About to get rocked this year all while knowing my bonus is going to be shit in 10 months. Heavily debating if it makes sense to stick around
I'm seeing a lot of banks winning mandates now to bring companies to market in the summer or latter half of the year.
Anecdotal, but seems like banks were stretched so thin last year with deal flow that they weren't pitching to renew their pipeline of deals enough.
This is a good summary of what I'm seeing. Think Q1 was one of the slowest quarters most people remembered (besides onset of COVID), but April has been solid. Bankers have indicated that this summer will be even better.
Canada UMM here. The advisory train is rolling on for us. Mining/energy guys are busy af, as are some verticals in tech. Across buy/sellsides and growth capital. Going to be a good year fee wise for some groups, but agree with the post above, overall performance isn't going to be great.
We're as busy as last year TBH. Pitching activity is probably a bit lighter, but we've been winning a higher percentage and have no shortage of opportunities.
BTT, are you in NYC or Chicago? And what sector, if you don't mind sharing?
"BTT" LMAO, you're destined for banking brother
Curious what made you decide to stay LT in IB? I’ve seen your position level get higher and higher over the years.
Bump.
On our end had been hearing since like November that Q1 2022 was going to be super light cause of how busy Q4 was last year. Everyone (U.S.) was expecting tax changes so deals were pulled forward to Q3/Q4 2021 that normally would've launched in Q1. Due to this all the 3rd party stuff (specifically QoE providers) got super backlogged and further pushed out anyone who was planning to launch in Q1.
Most bankers we talked to said deal flow would start to pick back up in Q2 and that's what we've been seeing in our pipeline this month.
Rising interest rates in the US to slow the inflation and velocity of money. If your sectors are mostly growth like software or tech its not going to be good. Also you have a war going on a few doors down from you.
My group in energy is on track to more than double the deals it closed last year. No semblance of WLB here.
My group is tracking to budget, which is the same as 2021’s record but definitely think the pipeline is light
I'm honestly surprised I haven't seen much chatter about the slow banking environment lately. I cover healthcare and to say it's been slow is a huge understatement. IPOs are down something like 85% relative to Q1 of 2021 in terms of total proceeds raised (and correspondingly banking revenue), and follow-ons are a similar story. Several of the IPOs I'm staffed on have been put on hold indefinitely, and given the performance of the sector, with so many companies trading at substantial discounts to cash, I don't see any near-term recovery to deal flow unless the market bounces back substantially (20%+). Granted there has been some M&A activity recently, but the bread and butter of many HC groups is equity capital markets - more than any other industry I am aware of, especially for some of the more prolific MMs like Cowen (whose stock is down >33% YTD).
SPACs are a similar story - I talked with the head of Nasdaq capital markets a couple weeks back and he expects >50% of the currently listed SPACs to liquidate. I honestly think it might be more like 75%+.
I saw a bunch of articles on recent bank earnings, and IB revenue in Q1 is down like 30-50% across the board for the major banks. Given how aggressive the recruiting environment was for banks in 2020-2021 for juniors with building out headcount, the recent pay bumps to junior bankers, and the massive drop in IB revenue, combined with the low probability of SPACs pulling through again to bolster revenue, I wonder if we'll start seeing mass layoffs if the markets don't bounce back in a quarter or two.
E: To clarify, I am talking mostly about life sciences above with respect to deal flow.
Just curious, are you seeing more trying to tap private capital? I would think so given the public financing window is pretty much closed.
I've definitely observed a much stronger bias toward the private capital markets lately.
I feel like prior to the market slump in late 2021 to present, there was a huge acceleration in the capital markets lifecycles of biotech and medtech companies. Ridiculous numbers of very early-stage companies were going public via enormous IPOs within like 24 months of company formation, which was simply unsustainable. The market was so hot that investors were carelessly throwing insane amounts of money at basically anything that came across their desk simply because they wanted to deploy more cash (I was working on a de-SPAC in mid-2021 and PMs at certain major LO funds admitted as much while we were running the PIPE). It has since come back to bite them badly, considering that the average 2021 biotech IPO is down like 50-60% at the moment, and a ton of funds are getting absolutely smoked, with some big name hedge funds down 40%+ as of late 2021.
I will say that although IPOs have seized up, private deals are still getting done at a pretty good clip. I think that it's a much more hospitable environment at the moment, since the major institutional shareholders can basically control the valuations of their portfolio companies, and they're not really getting marked to market on a daily basis like in the public markets. Private valuations have come back down to earth a bit as well though - I know of a few companies that did crossovers in mid 2021 but couldn't get their IPOs done, so now they have this albatross of a valuation hanging around their neck and need to either try to wait the market out or bite the bullet and do a down round, which would have been unheard of in 2020/2021. This has made it a bit more attractive for the funds with dry powder looking for value though.
From the company perspective, they have also been much more willing to stay private recently. The public FOMO is less intense given the current state of the market. We'll see how long they are willing to stay private though before they want liquidity.
This. ECM teams that doubled headcount in the last 12 months are likely in for a rude awakening. I suspect at the end of this calendar year, a good amount of VP/D level bankers get canned that aren't in strong groups. Every banker on the street thinks the market will open up in the summer, but I do not see any real reason to believe that besides wishful thinking. I think capital markets will remain shut for the remainder 2022, but there will be a decent amount of M&A and SPACs will begin returning capital to investors.
Real time - I’d say we’re definitely on track for another strong year, but not quite as strong as last year. Last year was a banner year, markets were euphoric. I think a lot of the bigger deals were put on hold, so total deal values are down, but overall deal volume looks good. Private markets are really strong.
Also seeing this at my bank. Our group is comprised of a very strong MD we poached and we did very well the past few years but the past two quarters have been dry as hell. The only deal we're closing is a sell-side that has been years in the making. Aside from that, one of the best businesses I have seen is barely getting interest from the same investors who before September were talking very liberally about throwing around cash.
While this is worrisome we did just have one of the biggest bull markets in history. Isn't this how cycles work? It gets dry for a little after and then mellows out until the next spending spree? Investors are not going to award large multiples when they can follow the markets and hold out to enjoy more conservative valuations that they then can flip during the next up swing. Looking for someone with more years in the game to shed light on this... thanks
Could be because we focus on growth stories mostly
In consumer group at a top MM bank, deal flow is insane. Were all drowning in work rn, turning away a lot of opportunities.
My firm has already started layoffs
Which firm
Can't tease us like that bro. Gotta name the firm.
Think folks need to realize that 2021 was an anomaly.
Sure, fees are down compared to 2021, but 2021 was by far the largest investment banking fee pool ever.
2022 is on pace to be a normal year on par with 2018, 2019, etc
How bad can I expect bonus to be in a top MM tech group? Blair, HL, Baird, etc.
Smaller bonus. Total down 20-30 percent? Higher the title the higher the cut
As others mentioned, banks who rely heavily on ECM will suffer this year (BBs will be fine because they are diversified beyond IB). With that said, M&A is still doing pretty well. PE funds are sitting on record levels of dry powder. They have to put that money to work and will continue to do so this year. The Q1 slump has to do with the fact that a lot of the high quality assets traded over the last 2 years, but the pipeline is improving. I think MM players will do particularly well in 2H 2022.
time for RX activity to go up
*Houlihan Lokey mfers have entered the chat
Great discussion, bumping. Would love to hear color from you buyside folks.
For public finance, refundings dried up overnight. RFPs have slowed down, while rates are still decent I feel new money is slower as a lot of issuers feel construction costs are crazy. Last year was a banner year, I bet that volume will be down 20%.
At a MM industrials PE shop - deal flow is insane rn - may be under staffed but mah gawd please stop uploading new documents to the DR on Fridays
looool that 5pm Friday 'updated sales pipeline' upload.
How often are your Fridays getting blown up with work in MM PE? Averaging around 70% blow-up rate at my MM IB.
Not much honestly - at a good shop where the people are great. We are ~$2-3Bn fund
I work in CorpDev where most of our deals are MM. We expected maybe a month and a half ago that we'd get busy and it's finally here.
A good number of the deals coming across our team right now want a quick process. Not sure if that's normal as I'm pretty new in the role.
any bank short ideas for earnings ?
Short GHL
Have shops stopped filling ASO VP jobs posted?
What happened during the GFC? Which bank division got laid off first. Do the big 4 hold up best?
Friends at tier 1 groups in Europe are saying deal flow is barely 1/2 of what it was last year. Same situation in North America but not quite as bad. APAC activity is steady though.
I’m in industrials, and I’m staffed on 4 live deals, with another 5 live across our team of 12.
Our flow has not even hinted at slowing down, nor is it close to being sustainable.
NOT IN APAC
The number of corporate bonds issuances have pretty much died down in April compared to very strong numbers in March. Leveraged finance market is completely dead atm.
Definitely feels slower than the second half of 2021. Looks like MDs in my group are lining up deals that will kick off in the fall, wondering if it will continue to remain slow until then. Definitely not complaining.
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