For the past couple of years, the deal makers on Wall Street have been partying hard. But now the party mood seems to have ebbed as a sharp decline in Mergers and Acquisitions (M&As) activities has started showing its ugly face. Despite the stock market's recent bull run, the buyout bubble has burst with the alarming decline in the M&A pace. Some of the Wall Street stalwarts, including Henry Kravis of Kohlberg Kravis Roberts & Company and Lloyd Blankfein of Goldman Sachs, have accepted that they could only hold on to some of the deals they agreed upon earlier. This clearly indicates the present murky sentiment among the Wall Street's deal makers, and at this time, for valid reasons, analysts are not foreseeing any mega deal. Typically, the future of the M&A activities rests upon the cash-rich private equity firms. They were indeed responsible for 24% of the total M&A activities in the second quarter of 2007.
In fact, according to estimates of JP Morgan Chase & Co., Lehman Brothers Holdings and Bank of America, the total deal value may decline by 20% in 2008 from a record of $3.9 tn in 2007. Thompson Corporation, the leading global business solutions provider, has estimated that in 2007, till July, the US deal volume totaled $1.1 tn which even led some analysts to project that the deal volume would touch $2 tn by the end of 2007. But since August 2007, M&A activity has slumped by more than 40% from a year ago. |
