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M&A slowing down: rates and wars depress transactions

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M&A slowing down: rates and wars depress transactions

(Teleborsa) – M&A operations this year they are collapse below 3 trillion of dollars for the first time in 10 years, due to the negative impact produced by the increase in interest rates and geopolitical tensions. This is what the Financial Times reports, citing data on the M&A activity of the London Stock Exchange.

Transactions have been made globally for a value of approximately 2,900 billion dollars, down 17% compared to 2022. It was also the first time since 2008-2009 that the value of announced deals fell by more than 10% for two consecutive years.

The Old Continent in suffering

The Europa showed the steepest decline, recording a decrease of 28% per year, while the region Asia-Pacific reported a 25% reduction and the United States of 6%.

Companies involved in M&A activity have had to deal with challenges on multiple fronts: the most intransigent attitude of the regulatory authorities, the interest rate rise and geopolitical tensions, not least the war between Israel and Hamas which added to the war in Ukraine.

Transactions conducted with the advice of financial intermediaries fell by 30% over the last year to $562 billion, as private equity groups, in many cases, had difficulty accepting evaluations of the proposed assets.

Completion times are getting longer

And more severe attitude on the part of competition authorities against enforcement has also dissuaded companies from bidding for competitors. Examples include Microsoft’s $75 billion acquisition of game maker Activision Blizzard, which closed after 21 months of uncertainty, while Microsoft’s $20 billion acquisition of software group Figma part of Adobe has been abandoned, following investigations launched by EU and UK authorities.

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Commissions decreasing

The global investment banking feesas a result of the slowdown in M&A activities, have been penalized and are fell by 8% to 105 billion of dollars. The commissions resulting from mergers and acquisitionsin particular, decreased more markedly (-26%) to 29 billion of dollars, the lowest level since 2016. Goldman Sachs maintained its top spot in mergers and acquisitions advisory, thanks to its leadership position in the United States, followed by Morgan Stanley and JPMorgan came second and third, reaffirming its respective leadership in Asia and Europe.

(Foto: © macgyverhh/123RF)

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