Investment bankers' advisory fees have plummeted to the lowest level in nearly a decade as the industry suffers a wave of job cuts due to a prolonged slowdown in business activity. Fees for completed mergers and acquisitions globally plummeted 35 percent in the first half of the year to $12.8 billion compared with 2022, the lowest level since 2014, according to data provider Refinitiv. Global M&A fell 38% to $1.3 trillion in the first half, the lowest transaction volume since the start of the pandemic in 2020, as higher fees, stricter antitrust enforcement and geopolitical tensions hit the market. Deals driven by private equity groups, usually a key factor in dealmaking, also slumped. Global private equity-backed M&A activity fell to $263.3 billion in the first six months, down 51% from last year. Deals between private equity groups have been hampered by a number of factors including rising debt costs, concerns about the economic outlook and difficulty agreeing on transaction valuations.
There are a lot of headwinds,” said David Walker, a partner at the law firm Latham and Watkins who focuses on private equity deals. Job cuts at the largest U.S. banks this year are on track to top 11,000 as Wall Street Russia Mobile Number List faces its worst recruiting market since the 2007-08 financial crisis following a hiring binge in the pandemic era. Major banks like Goldman Sachs and JPMorgan, which made profits during the recent trading boom, are wielding the axe. Goldman, which topped the M&A advisor rankings last year, is eliminating fewer than 250 jobs in new cuts across the bank, primarily at the senior level. “We are managing the company more tightly and preparing for a more difficult environment,” Goldman Chairman John Waldron warned at a conference this month. “Activity levels are definitely more moderate.
However, there were signs of optimism for trading during the second quarter, up 23 percent compared to the first, which was the slowest start to the year in a decade. The second quarter recovery has been helped by less traditional approaches to transactions. Natural resources deals have been a rare bright spot in a tough M&A market “We're seeing hostile bids, bids, overbids, spinoffs, spinoffs, you name it,” said Melissa Sawyer, global head of the mergers and acquisitions group at law firm Sullivan and Cromwell. “People just have to be more creative in the way they do things.” The spinoff of health care multinational Johnson & Johnson's consumer unit marked the largest U.S. initial public offering in nearly 18 months. And a hostile approach by Swiss-based commodities trader Glencore to buy Canada's Teck Resources for $23 billion in April set off one of the mining industry's biggest takeover battles in decades.