When I first began reporting on the post Big Bang City in the late Eighties scarcely a day would pass without the button being pushed on another takeover, buyout or mega-merger.
Many were hostile and contested, leading to protracted and aggressive battles for control. The corporate finance teams were rarely without lucrative work. The living and the bonuses were good; the top dealmakers were the kings of the Square Mile.
That golden era of M&A reached its zenith in the years leading up to the financial crisis with RBS’s 2007 takeover of Dutch bank ABN Amro. That proved one of the catalysts for the crash that came the following year. Frankly things have never been the same since.
The past year has been particularly bleak for M&A activity involving a UK company, according to figures today from analysts LSEG Deals Intelligence.
In the first nine months of the year deals have totalled just $176.1 billion, down by almost half on the same period last year, and the lowest year-to-date total since 2009. The biggest in the third quarter was the US$6.1 billion takeover offer for Dechra Pharmaceuticals by Swedish buyout group EQT. A reasonably chunky acquisition, but nothing like the incredible struggles for ownership — often for household name corporate giants — of the Eighties, Nineties and Noughties.
It is easy to be nostalgic for those times but whether any of those swashbuckling deals added a single penny of economic or shareholder value in the long run is open to question. Many were hugely destructive, and disruptive.
According to LSEG Deals Intelligence’s Lucille Jones, it is the gloomy outlook for the economy “with recession looming” that is largely responsible for the sluggish deal flow. That is only part of the story. There has been a huge cultural change in the City since the heady days of multi-billion-pound leveraged buyouts, poison pills and Pac-Man defences.
The cold reality for corporate financiers is they are unlikely ever to come back.
