Goldman Sachs & Co. (GS), JPMorgan Chase & Co. (JPM), Morgan Stanley (MS), and other financial institutions are raking in billions of dollars in takeover fees on this year’s unexpectedly strong M&A wave. Close to $2.7 trillion in deals have been struck globally since the start of the year. Surprisingly, the flurry of activity is all happening in spite of the trade war, the possible impeachment of the president of the world’s number one economy, and other headwinds, according to a column in Bloomberg.
The ten leading banks and the fees they have collected from M&A’s through the first three quarters of this year are Goldman Sachs at $1.95 billion, JPMorgan at $1.35 billion, Morgan Stanley at $1.28 billion, Bank of America Corp. (BAC) at $933 million, Citigroup Inc. (C) at $722 million, Barclays Plc. (BCS) at $697 million, Credit Suisse Group (CS) at $615 million, Lazard Ltd. (LAZ) at $594 million, Evercore Partners (EVR) at $589 million, and Rothschild & Co. at $502 million, according to Bloomberg data published in the Financial Times.
- Almost $2.7 trillion in M&A deals have been struck globally this year.
- M&A advisers have amassed $20.7 billion in M&A fees.
- Charles Schwab to acquire TD Ameritrade for $26 billion.
- LVMH Moet Hennessey Louis Vuitton to buy Tiffany for $16 billion.
- KKR to possibly acquire Walgreens Boots Alliance for $54 billion.
What it Means for Investors
The amount of M&A activity is also surprising in light of recent writedowns that have occurred on some high-profile mergers. General Electric Co. (GE) wrote off $23 billion in October 2018 from its acquisition of Alstom, and Kraft Heinz Co. (KHC) reported a $7.3 billion goodwill impairment in February, which was related to an acquisition made in 2015. One gauge of the M&A market, an index measuring CEO confidence, has also fallen to lows not seen since 2016.
But dealmakers appear to be bullish about the future. Recession fears appear to be subsiding, the S&P 500 is hitting new highs, and EBITDA multiples remain elevated. Amid those positive signs, four new deals totaling nearly $56 billion were announced in the past week alone, per Bloomberg. On top of that, there still looms the possibility that KKR & Co. (KKR) takes Walgreens Boots Alliance Inc. (WBA) private in what could be the biggest leveraged buyout ever at $54 billion.
Online brokerage Charles Schwab Corp. (SCHW) announced plans on Monday to buy TD Ameritrade Holdings Corp. (AMTD) for $26 billion in a stock-swap deal. European luxury conglomerate LVMH Moet Hennessey Louis Vuitton SE said it had reached an agreement Monday to acquire retailer Tiffany & Co. (TIF) in a cash deal worth approximately $16.2 billion. Novartis AG (NVS) announced plans to buy Medicines Co. (MDCO) for $9.7 billion and Viagogo Entertainment Inc. is set to purchase StubHub from EBay Inc. (EBAY) for about $4 billion.
And it’s not just America and Europe that are experiencing the M&A frenzy. Earlier this year, Bloomberg reported that a whopping $1 trillion M&A wave may sweep across the Middle East. Merger talks have been underway this year among a large number of Gulf financial institutions.