How M&A is Getting Less Lucrative for Wall Street

The M&A industry is struggling, now that financial buyers (private-equity shops) can’t snap up companies willy-nilly using cheap debt. On the other hand, if this morning’s news is anything to go buy, friendly strategic deals using equity rather than debt are all the rage: Bunge is buying Corn Products International for $4.4 billion in stock, and garbage company Republic Services is buying Allied Waste Industries for $6.1 billion in stock.

These deals are much less profitable for investment banks than acquisitions which require a lot of financing. But there’s no reason why industry consolidation should always be accompanied by enormous profits on Wall Street. I have no opinion on whether these deals are good or bad. But insofar as they don’t involve paying monster fees to banks and lawyers, they’re probably doing something right.

This entry was posted in banking, M&A. Bookmark the permalink.