What’s Going On Here?Data out this week showed that global dealmaking has fallen off a cliff. What Does This Mean?The mergers and acquisitions (M&A) market began the summer on a record high, with eight back-to-back, breezy quarters of over $1 trillion in deals. But things have taken a turn since – and with only $640 billion in deals agreed since July began, we’re on track for M&A’s worst quarter since the pandemic brought dealmaking to a halt in 2020. “Disappointed but not surprised” – your parents’ catchphrase when you were a teen – probably captures the world’s reaction to the news pretty accurately. After all, fears of a recession mean companies are feeling weak-kneed about making big purchases, and dented share prices mean they’d have to sacrifice more of their stock than usual as payment. On top of that, loans are increasingly hard to come by – and expensive even when they can be found. Why Should I Care?Zooming in: Expect deals to fail.
Even private equity firms – which buy up companies in the hope of improving and reselling them later on – have gone off the boil. Spurned by picky banks who are reluctant to fund their ventures, they’ve been turning to private lenders to plug the gap. Now, though, it’s clear that private lenders only have so much cash to give, and the spectacle of huge deals being delayed – or simply falling through – is becoming commonplace.
For markets: Asia’s holding firm.
The initial public offering market is in a similar sorry state at the minute but one way or another, Asia seems to be bucking the trend. This year, money raised through stock listings in Asia makes up a record 68% of the global total, versus a meager 14% in the US – traditionally the world’s busiest listings market. That said, some of Asia’s most impressive sums were raised by Chinese companies that got booted out of the US, like China Mobile and CNOOC. | 