Analysis-US investment banks see early signs of revival in dealmaking

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Major Wall Street firms said a dismal year of dealmaking appears to have hit a trough, and now some companies are looking to merge, offering hope that...

NEW YORK - Major Wall Street firms said a dismal year of dealmaking appears to have hit a trough, and now some companies are looking to merge, offering hope that investment banking revenues could pick up after a disappointing third quarter.

"Client discussions have been turning more constructive over the past several months," said Orszag, who took the helm earlier this month. The independent investment bank on Thursday missed Wall Street estimates for third-quarter profit, as its advisory business reeled from a prolonged slump in dealmaking.

Investment banking revenue will probably rise 5% to 10% next year for the largest banks, according to Mike Mayo, an analyst at Wells Fargo. Still, activity will remain subdued relative to a blockbuster year in 2021. Last week, Engaged Capital called on apparel maker VF, which owns The North Face brand, to consider selling non-core assets. Starboard Value recommended that News Corp spin off its digital real estate division and Jana Partners called on Frontier Communications to sell itself.

"If conditions remain conducive, I expect the continued recovery for both capital markets and strategic activity," he told analysts on a post-earnings conference call.

 

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