Shoots of optimism for M&A
The icy winds gusting through the M&A market have been compared to a ‘mild ice age’ by Merrill Lynch’s Head of European M&A, Carlo Calabria.
The late 1970s were characterised by soaring oil and gold prices, rampant inflation, war in the Middle East, an embattled government and an economy seemingly grinding to a halt. Jump to today and how times have changed. In these less than ideal circumstances there are still shoots of optimism and, dare we say, growth in M&A fees in parts of the world.
Although overall deal levels are down 39% versus the first half of 2007, they still equate favourably with 2005 and indeed seven out of nine of the world’s largest M&A transactions have occurred since the end of April. Moreover, deal volumes should be maintained due to healthy growth in the emerging markets and also specific M&A sectors. Within the BRIC group for example, Russian M&A fees are up 18%, Brazilian up 99% and Chinese up 58%.
“The key for candidates is ‘flexibility’, both in terms of sector and location”
The key for candidates is ‘flexibility’, both in terms of sector and location. Although it would be disingenuous to suggest the bulge bracket banks will be back on the hiring trail soon, the boutique M&A firms with strong exposure to certain sectors such as infrastructure & FIG certainly are. In terms of location, M&A houses that have exposure to emerging markets are very much looking to expand and candidates open to relocating are in the ideal position.
What about the implications for employers and their recruitment strategies?
Though the total number of candidates in the market is growing and their quality is actually quite varied, they will all have similar concerns. If you are UK based, you need to be very well aware that many UK based candidates are looking to emerging markets for better deal-flow and career progression. As a result, you will need to factor that in to your benefit/salary packages. Moreover, if your sector is not currently experiencing positive growth, you will need to work harder on persuading generalists to commit to your firms specific sectors. Finally, from the outset, you will need to take extra care to agree your objectives in terms of the role and person profile required – as a result of market conditions there are less jobs available but more CVs coming in so knowing what you want becomes even more essential.
All in all, as one of our boutique M&A customers mentioned recently, “if a UK firm is fortunate enough to currently have a healthy balance sheet, then this is an ideal time to leave their competitors trailing”.
We welcome your comments on this article.
Comments are moderated and may not appear immediately.