Mergers and acquisitions on Wall Street provide opportunities for investors and banks to make money through advice or financing transactions, in addition to providing payouts for investors and employees. However, recent years have seen a decline in M&A activity, with 2023 experiencing some of the lowest activity in a decade. Factors such as recession fears, high interest rates, and geopolitical tensions have contributed to this decline. Stephan Feldgoise, Goldman Sachs co-head of global M&A, discusses the current state of M&A and what to expect in the upcoming earnings season.
Feldgoise rates the M&A activity in 2021 a 10 out of 10 but notes that 2023 fell drastically in comparison. The year started with more large transactions, indicating a trend that could lead to a moderate increase in activity. He emphasizes that there have been both strong and quiet periods in the market, with potential for cautious optimism. Factors such as geopolitical risks and interest rates impact CEO and board confidence which ultimately drives M&A activity.
The term “green shoots” is often used in reference to M&A, suggesting that there are signs of growth beginning to emerge. Feldgoise believes that while there are underlying trends that show positive momentum, the growth will not be a straight line but rather sporadic with periods of progress followed by setbacks. M&A activity and trends are indicative of overall economic and market conditions, impacting businesses, consumers, and investors alike.
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