H2 Rebound? Let’s discuss
Have heard several banks across the street mention a H2 rebound in M&A. Personally, I don’t see it. Are they all talk or are we thinking this is something real?
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What’s your reasoning for not seeing it?
There’s a lot of pent up demand for M&A and (especially) debt financings. If inflation continues to drop and the fed cuts rates, a burst of deal activity wouldn’t shock me.
Inflation will artificially taper off of record high numbers, but I don’t think rates will drop quick enough to get anything done by YE. I do expect massive volumes in 24, but I’m not expecting a full turn around before the end of the year. Too much has to change in too little time.
Asking out of ignorance, what does "pent up demand for M&A" mean? Like cos have hella cash sitting around / founders want to exit? Maybe the excess dry powder problem in PE with the IRR time ticking?
Many financial sponsors need to exit assets that they’ve held for 5+ years. Lots of them tried unsuccessfully to do so over the last 6-8 months
Of course everyone wants to sell. No one wants to buy at current prices with current debt costs though. Still a size able bid ask spread
Bump
Agree with above - H2 may come up because the bar is pretty low for it to go down... personally see demand coming back in 2024 once companies are more used to the reality of financing at a rate above basically free
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