Photo: ARND WIEGMANN / REUTERS
In 2021, the world was still in perfect order for investment bankers: According to the data provider Refinitiv, more than 63,000 mergers and acquisitions worldwide with a volume of 5.9 trillion dollars filled the coffers of bankers, surpassing the record year 2015 by around 1.5 trillion dollars.
As if intoxicated, the experts handled mergers, IPOs and takeovers, collected princely fees and honoraria – driven above all by the boom in the technology sector, low interest rates and risk-taking private equity investors.
The intoxication will be followed by the "hangover" in 2022: While deals with a volume of 2.2 trillion dollars were agreed in the first half of the year, announced mergers and acquisitions in the second half of the year brought them to a volume of 1.4 trillion dollars.
This is not only a significant drop of around 38 percent from 2021, but also the largest six-month drop since records began in 1980, reports the Financial Times, citing unreleased figures from Refinitiv.
Financing rounds for young tech companies also came to a full stop in the second half of 2022: venture capitalists are holding back.
A key reason for the decline in 2022 is sharply higher interest rates, which have significantly increased the cost of financing acquisitions and mergers, says Mark Sorrell, co-head of global M&A at Goldman Sachs Central Bank in 2022 the key interest rate to 4.5 percent.
Investment banks' M&A revenues plummet
Not only did the total volume in the M&A sector decrease, the number of large deals worth more than ten billion dollars also fell significantly: from 25 in the first half of the year to 11 in the second half of 2022.
The institutes involved are clearly feeling the slump in deals: According to preliminary data from the provider Dealogic, the ten largest investment banks took in 31.8 billion dollars with mergers and acquisitions in 2022, reports "Financial News".
That is around $34 billion less than in the record year 2021.
According to the report, the hardest hit among the investment banks was the Swiss Credit Suisse, whose income in this sector collapsed by almost 60 percent to $1.8 billion.
The crisis-plagued major Swiss bank only announced a billion-dollar loss for the fourth quarter of 2022 at the end of November - and thus the fifth quarterly loss in a row.
As part of its restructuring plan, Credit Suisse now wants to cut around 9,000 jobs by 2025.
But Goldman Sachs' high-end bankers, who are traditionally more dependent on fees and income from the M&A business, also had to lose feathers.
Because of the weak investment banking business in the third quarter, profit collapsed by around 44 percent.
However, Goldman Sachs will also cut jobs in anticipation of a weaker economy and tighter monetary conditions in the coming year.
Up to 4,000 employees still have to reckon with their dismissal next January.