After several years of optimism, the global corporate community takes a decidedly gloomier view of the year ahead for investment banking.
• Weakening outlook for corporate growth in 2013 contrasts with last year’s broadly positive forecasts; respondents predict a much bleaker year for hiring and investment, especially in Europe. Expectations for revenue and profit growth down sharply in Americas and EMEA.
• Incumbent banking relationships predicted to be at risk to low-cost service; firms now value competitive fees rather than existing relationships when selecting a bank. (Asian firms remain less sensitive to fees however).
• M&A increasingly driven by depressed valuations and the many high-quality assets available for purchase. Management less pressurised to spend excess cash or keep up with competition.
• Corporates more likely to use M&A to realign businesses to core markets, than to expand their geographical presence or transform the business.
• Modest uptick expected in M&A compared to last year - led by Healthcare sector.
• Focus on undervalued assets seen in renewed interest in M&A opportunities in Europe. European firms likely to continue being targeted heavily by US and Asian buyers. EMEA firms increasingly see value in domestic opportunities as well.
• Equity deal volumes expected to remain near 10-year lows, despite positive forecasts from Americas. EMEA and APAC see M&A as better alternative in 2013.
• Corporate bond issuance set to continue and top 2009’s record levels, driven by limited availability of bank loans.
• Borrowing set to rebound in 2013 as rates remain attractive; growth more optimistic for syndicated loans than other financing products.
Leon Saunders Calvert, Head of Global Deals at Thomson Reuters, commented: 'The uncertainty of the market in relation to deal-making activity is reflected in this year’s Thomson Reuters/Freeman Consulting’s global survey of corporate companies. Their exuberance of mid-2011, shown in last year’s results, has been replaced with tempered optimism. An as yet unresolved Eurozone crisis and the pending US presidential elections make predictions for 2013 activity particularly difficult'.
For further information, please contact us or register for a webcast presenting the results of the survey on Thursday 18th October at 9.00am ET, 14.00pm UK, 15.00pm Western Europe.
Over the summer, individuals from over 140 firms globally gave their views on the outlook for investment banking services in 2013. Respondents ranged from small, regional businesses to US$200billion+ conglomerates.