Wall Street keeps living only if mergers and acquisition get crowded. It is like Wall Street’s bread and butter. This is because, when companies merge, or one company buys another, it builds opportunities for investors and banks to make money by providing advice or finance for M&A transaction. However, mergers and acquisitions has become less and less in the past year as dealmakers are facing rising interest rates and recessions. In this case, Goldman Sachs and Morgan Stanley, investment banking powerhouses reported many drops. Both have faced substantial frops in profit and revenue.
Earlier this year, things were starting to work better because dealmaking resumed. However, market uncertainty around the self-imposed debt limit plus the possibility of a U.S. default has hindered them again. In this dealmaking drama in Wall Street, Bell spoke with Mitch Berlin, EY Americas Vice Chair, Strategy and Transactions before. They discuss about everything that comes into effects. Berlin believes that the was significant drop in dealmaking in the back half of 2022 due to the rise of interest rates. M&A continued to be tough in 2023 because companies balanced persistent inflation and the high cost of capital against growth and employment.
However, dealmaking continues to get better at the end of the first quarter with March deal value with the total of January and February combined. But now, companies find it difficult in financing due to the tightening credit conditions from stress in the banking sector and an uncertain economic outlook. Plus, they have the risk from debt default.
