M&A fees fall 32 pct in 2008 as deals die
By Michael Flaherty
HONG KONG Dec 23 (Reuters) - Fees from mergers and acquisitions, a major source of revenue for investment banks, fell by a third this year, as plunging global markets crippled financing for takeovers and led to a record amount of deals collapsing.
The picture for M&A fees in the first half of next year isn't looking any brighter, investment bankers say, as few see any real recovery in global markets happening soon. Private equity buyers are still mainly on the sidelines, unable to get loans for big deals.
In a sign of the times, M&A fees for advising buyers and sellers of distressed companies and corporate restructurings are expected to increase as tough economic times continue.
That activity will keep fee streams flowing into banks, though the size of deals in this category are typically smaller than those reaped in heavy takeover periods.
"There is no single geography left untouched. Any entity anywhere with debt maturing may potentially be faced with liquidity issues. And if they are, then M&A is likely to become one of their strategic options," said Matthew Hanning, Asia Pacific head of M&A and corporate advisory at UBS AG UBSN.VX.
In addition to distressed deals, countries such as China and Japan are likely to feed deal flow, as cashed-up companies there have shown an increasing appetite for overseas acquisitions.
Any way you slice the 2008 M&A fee table, however, it paints an overall grim picture of the current takeover climate.
Global M&A-related fees fell 32 percent this year to $34.2 billion, according to calculations by Thomson Reuters and Freeman & Co. Continuación...