M&A Falls 43% In Q3

There was some hope that as mortgage problems and hedge fund headaches took down shares and earnings of investment banks like Lehman (LEH) and Morgan Stanley (MS) that global M&A fees would take up some of the slack. In its earnings announcement, Goldman Sachs (GS) said it liked its M&A pipeline going forward.

But, Goldman may be alone. A study by Dealogic picked up by the FT, shows M&A activity off 43% in the third quarter when compared with the immediately previous period. Most bankers believe that, if there is no recession, business could pick back up again.

The bankers should not hold their breath. Not only is the economy softening, but the private equity transactions that helped built M&A practices over the last two years have gone away. And, company-to-company mergers are unlikely to pick up the slack.

It’s an M&A recession, and it may well be a long one.

Douglas A. McIntyre