Surging M&A Backlog

With another multi-billion dollar acquisition announced seemingly every day, why does the FCS Growth Scorecard still show the U.S. M&A advisory fee pool as flat year-over-year? The answer: we only record M&A fees if and when a deal is closed. (Our accounting reflects the reality that, for most deals, about 80-90% of advisory fees are paid on success.) Announced mega-merger volume has indeed exploded +50% in the last 6 months, but many of these transactions remain in the backlog.

Given the strength of the current M&A backlog, many advisors could have an exceptionally strong 2H. Among major advisors, Qatalyst currently has the strongest M&A fee backlog relative to the size of its actual M&A business in the trailing year. Qatalyst’s pipeline is headlined by a trio of sell-side assignments for semiconductor firms Microsemi, NXP, and Cavium, for which Qatalyst is poised to collect over $150m. Several other advisors that lost M&A market share in the last year – including Greenhill, Centerview, and RBC – also have exceptionally strong pipelines that should enable a recovery in the coming year.

While the backlog is a strong predictor of future performance, it’s far from certain. AT&T’s acquisition of Time Warner is the largest deal currently pending, but looks increasingly tenuous in the face of the DOJ’s challenge. Moreover, the backlog is filled with inbound cross-border acquisitions, which tend to carry a higher risk of failure. For large-cap focused M&A advisors, the next year is likely to be one of heightened risk-reward possibilities.

#MA #pending #Greenhill #Qatalyst #Centerview #RBC #WellsFargo #Moelis #Financials #LargeCap

Recent Posts
Search By Tags
No tags yet.
Follow Us
  • LinkedIn Social Icon
  • Twitter Basic Square

© 2017 Freeman & Co. LLC

The information and services provided on this website are not provided to, and may not be used by, any person or entity in any jurisdiction where the provision or use thereof would be contrary to applicable laws, rules or regulations of any government authority or regulatory or self-regulatory organization or where Freeman & Co. or its affiliates is not authorized to provide such services or information.  Material on this website is not an offer to sell or a solicitation of an offer to buy any securities.  Transactions, products and services discussed on this website may not be appropriate for sale or use in all jurisdictions or for all investors.  The information on this website is not investment advice or other advice and should not be deemed a recommendation of any transaction or security.  Transactions described on this website are a selected sample and are not necessarily reflective of overall performance by Freeman & Co. or its affiliates.

  • Tumblr Social Icon
  • LinkedIn Social Icon