Rob Brown, 2022, 2023 discussed on Bloomberg Markets
You so much. We appreciate that many parts of this economy are really, uh, expanding on the other side of this pandemic. As the US begins the long reopening process. One of those areas is mergers and acquisitions. We see that from the big investment banks, putting up some really blockbuster numbers over the last several quarters. We want to get the latest On the M and a market. We chat with Rob Brown, he's managing director and CEO of North America for Lincoln International, Rob. Thanks so much for joining us here again. We've seen some numbers out of some of the publicly traded investment banking companies talk to us. Give us your perspective of the M and a market as this. U. S economy really begins to reopen. Well, I think we have had and you've seen the numbers. As you mentioned. We've had a really, really active first half of the year in terms of number of merger and acquisitions transactions, But as importantly, Got a blockbuster values and it's our view based upon our activity at the second half is going to actually be more active than the first half. That's so interesting, too, because I was wondering how much this would become a feeble for the big banks. If you look at it. Goldman, JPMorgan Morgan Stanley. They each have the highest share in market share that they've had in a couple years. Goldman Morgan's JP Morgan more than 30%. And some of their other businesses, Rob are are going to struggle a little more than they had the last couple of months. Is M n a going to keep Wall Street popped up. Propped up Yeah, I think it's 100% is going to keep it propped up through the end of this year for sure and and likely in the next year, and there's a few reasons for that. I mean, if you look at just the conditions for a really Active in a market in terms of transactions and values. One We're still in a position where there's more capital sitting on the sidelines on the balance sheet of large corporate and sitting in private equity funds and other financial investors, there's more capital available than there are high quality companies to buy so that supply and demand imbalance. Is going to create high values and you layer on top of that a good number of deals that should have gotten done last year that were covid effective that are now springing back as the economy recovers, and then layer on top of that. Lot of businesses that left a normal gestation might sell in 2022 or 2023 beyond are being pulled into this year for fears over a material increase in capital gains rates coming out of the Biden administration. So you have You have a level of activity that is really just more than anyone year and putting on top of that, and again, I'm piling on her little If you look at where interest rates are, there's two effects of that One is death is essentially free for many of these folks. But more importantly, when interest rates are this low, the large institutional investors looking for return there just allocating more to alternative assets and one of the most attractive elements of alternative alternative assets. His private equity, so these firms can continue to raise more and more money and the more they raise, the more pressure. They have to spend it. Talk to us about valuations here, Rob. You know, I hear all this bullish talk. You know, all the drivers here for supporting Emina and I've seen in past cycles. Unfortunately, firsthand, In some cases, a lot of bad deals get done towards the end of a cycle. Give us a sense of kind of evaluations that you're seeing out there. We would say, um, really across every sector. They're the highest valuations we have ever seen. And you might say. In fact, I'll say it's very rare where we're selling the company that's not in the double digits of of of cash flow, multiples, multiples and And again, that's that's across the firm. And then there's some. We're seeing that are trading at 20, plus times, earnings or even d A, um so the and you You talked about it about the you know the potential with government subsidies ending and what that's going to mean for the consumer. But right now, all the businesses we're selling our way outperforming last year, and many of them are outperforming a budget, which was pretty aggressive budget coming in, so you have strong performance and a lot of it is. There's a lot of money pumped into this economy by the global central banks, and it's starting to take effect. Big cloud on the horizon, potentially, and we're not seeing it affect performance, And this is where you can see some of these businesses tighten up is inflation. Now that's something economist have been worried about and talking about for years, but there seems to be A little more concerned when you listen to the central panics, and the economists about it was all this money pumped into the economy is inflation going to become an issue here? Rob. Thanks so much for joining us really appreciate it. Getting your thoughts on the M and a business hot as ever Rob brownies and managing director and CEO of North America for Lincoln International, and We're going to see that starting next week with the companies that you covered so closely, Shonali will get a real good look at their, uh M and a business and pipeline record pipeline so far. Yeah, it's been interesting. And so again, uh, all the topics are there all the drivers that they're low interest rates. Lots of cash, maybe a little bit of a deal's postponed from last year. So all types of deals IPOs, mergers and acquisitions. Got to wonder what it means for job cuts. Got to be honest, Yeah, interesting, But maybe it's job creation for the investment banks. They need some folks to process all those deals. But again, it's really fascinating to pay attention to those big bank earnings that starts next week that Shonali will be covering right now. Let's sit.