atans1

No bonus this yr/ How deals get done

In Investment banking on 29/08/2015 at 4:16 am

A Hard Year for Investment Banks in Southeast Asia. Slowing economies have led to the scrapping of several initial public offerings, a drought in mergers and acquisitions, and a plunge in local currencies that has discouraged investors from buying stock and bonds issued locally.

How deals get done

NYT Dealbook also

Deals are underpinned by a trust that the prices discussed are fair and that the move is the best way to finance further growth. But sharp gyrations in the broad stock markets could unnerve the people responsible for making these decisions.

“Whenever you see this kind of turmoil in the market, it can shake people’s confidence,” said Kenneth M. Jacobs, the chief executive of Lazard. “You could see a pause until the dust settles and conditions become clearer.”

Advisers say many of the factors that have underpinned the huge boom in mergers have stayed in place. The cost of borrowing money remains cheap, letting buyers take on debt to take over their targets.

Lower share prices would not necessarily create an issue. If stocks fall to a new level, management teams would work with this new normal. It would also benefit private equity firms, who have routinely been outbid by corporate buyers able to pay more for targets. The problem is the volatility in markets. If markets are plunging one day and rebounding the next, it would make it difficult to price a takeover.

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