M&A firm market overview: Key players and most important trends of 2023
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Despite M&A deal value hitting a 20-year low in the first quarter of 2023, there are still encouraging signs of improvement, making dealmakers believe in the potential of M&A transactions as effective strategic tools for business growth.
To learn more about current M&A trends and discover the best M&A firms of 2023, keep reading the article.
- M&A advisory firms or investment banks play a critical role in facilitating complex corporate transactions. They offer a variety of services, including market research, valuation, due diligence, deal structuring, financing, legal compliance, and post-merger integration.
- Top M&A advisory firms include Morgan Stanley, Credit Suisse, Scotiabank, Wells Fargo, Robey Warshaw, Deutsche Bank, Simmons & Company, Societe Generale, Peel Hunt, and Goldman Sachs.
- Global M&A activity declined by 44% in the first half of 2023 compared to the previous year.
- Despite challenges, some dealmakers remain optimistic, citing reduced valuation declines, substantial available capital, and glimpses of economic recovery as reasons for confidence in the M&A market.
What is an M&A firm?
An M&A firm, also known as an M&A advisory firm or investment bank, is a specialized financial institution or consultancy that provides services related to mergers, acquisitions, divestitures, and other corporate transactions, for a fee. These firms play a crucial role in facilitating complex deals between companies.
The role of M&A advisory firms
M&A advisory firms have become a crucial part of the global economy. At first glance, a financial advisory firm is simply a conductor element in a business transaction between two companies. However, M&A experts contribute much more to the decision-making processes and the ultimate success of any deal.
An M&A advisory firm or an investment bank fulfills multiple roles and functions to ensure their clients get the best deal. This includes:
- Advisory services. M&A firms provide expert guidance, offer strategic advice, and help clients navigate complex decisions.
- Market research. M&A advisors provide market research and analysis to help clients identify potential acquisition targets or buyers. They evaluate market trends, competition, and growth opportunities.
- Valuation. M&A firms assess the fair value of assets or businesses involved in a transaction. They use different valuation methods, like discounted cash flow (DCF) or market capitalization.
- Due diligence. M&A specialists conduct thorough due diligence to evaluate the financial, legal, and operational aspects of target companies. This process helps clients identify potential risks and make informed decisions.
- Deal structuring. M&A advisors assist in structuring the transaction to optimize financial outcomes and meet the strategic goals of their clients. They help negotiate terms and conditions that are favorable to their clients.
- Financing. Some M&A firms also assist clients in securing financing for their transactions. They may help arrange debt or equity financing, depending on the needs of the deal.
- Legal and regulatory compliance. M&A firms know the peculiarities of the legal and regulatory requirements associated with mergers and acquisitions. They help clients navigate these complexities to ensure compliance.
- Post-merger integration. M&A specialists may also assist with the integration of the two companies involved in the transaction. This may include aligning organizational structures and optimizing resource allocation to achieve operational efficiency and maximize the benefits of the merger.
Investment banks explained
An investment banking firm delivers various financial advisory services during complex transactions such as M&A and IPO launches. An investment banker plays a similar role to a personal banking teller but on an enterprise level.
For the most part, M&A investment banks stay above the lower middle market and rarely participate in smaller deals. However, in some cases, an advisory firm can serve as a consultant for any company undergoing a compound transaction.
Most mergers and acquisition firms that operate in the investment banking sector focus their value on providing advisory services, performing due diligence, and ensuring legal and effective business practices.
10 top M&A advisory firms and investment bankers
Let’s take a closer look at the top M&A advisory firms that get wide recognition and provide financial advisory services to strategic buyers globally.
1. Morgan Stanley
In 1935, Morgan Stanley was a small company offering Wall Street partnerships. Over the years of existence, it built a strong track record of successful deal handling with an ever-expanding business model.
The company was established by the grandson of J.P. Morgan, a famous personal financial advisor and investment banker who practically monopolized Wall Street during the Gilded Age.
Morgan Stanely operates as a financial advisory firm for complex transactions, wealth management, networking with investment banks, and driving the business forward.
Like most advisory firms, Morgan Stanley’s financial advisory services include consultancy during mergers and acquisitions, sale transaction financing, restructuring advisory, and developing maximum value business strategies.
In 2022, Morgan Stanley stood out as the top financial adviser, boasting a remarkable track record with five significant deals totaling approximately $49 billion in transaction value.
2. Credit Suisse
Credit Suisse was founded in 1856 as a solution for funding the Swiss railway development. In the early 1900s, Credit Suisse shifted towards retail banking, operating as a financial advisory firm that helped the European economy grow via cross-border deals.
In the past decade, Credit Suisse acted as an investment bank in business transactions in financial, oil and gas, healthcare, real estate, and other industries.
As a merger and acquisition firm, Credit Suisse supports its clients with equity financing, financial advisory services, mergers and acquisitions, and sell-side management acquisitions.
Credit Suisse’s business operations are built to drive growth, employ top advisory firm practices, and privately assist high-profile clients like family offices and top-tier investors.
One of Credit Suisse’s most notable business transactions in recent years was Willis Towers Watson’s $30 billion merger with Aon. During this deal, Credit Suisse consulted the buy-side alongside other major advisory firms such as Goldman Sachs, Bank of America, and Morgan Stanley.
The Bank of Nova Scotia, or Scotiabank, was founded in 1831 in Canada as one of the first public banks. Until now, the bank is recognized for its competitive advantage of comfortable interest rates and maximum value creation to its clients.
As a top M&A firm, a financial advisory firm, and an investment bank, Scotiabank supports business transactions across many industries, including finance, retail, energy, real estate, and more.
Scotiabank offers expertise and financial advisory services to buy- and sell-side parties undergoing mergers and acquisitions. The bank assists clients with processing complex financial transactions, researching opportunities, and communicating with the other firm during the deal.
Despite the primarily North American business positioning, Scotiabank successfully operates among international advisory firms, particularly expanding into Latin America.
4. Wells Fargo
Wells Fargo was founded in 1852 as a personal banking solution. Over the years, Wells Fargo grew into one of the top M&A advisory firms in the U.S., competing with leading investment banks.
Wells Fargo is one of the top M&A advisory firms that support business executives during local and cross-border transactions in commercial real estate and institutional investing sectors.
Wells Fargo offers many of the same products and financial advisory services as the competing advisory firms. This includes accurate valuation of the target firm, exit strategy planning, investment bankers’ consultancy, and other business transactions during mergers and acquisitions, fundraising, and investing.
Wells Fargo’s combination of expertise and instruments helps increase and realize deal value for business transactions in the technology, healthcare, consumer retail, and energy and power segments.
In 2022, Wells Fargo’s revenue amounted to approximately $73.8 billion, falling short by $10-12 billion compared to pre-pandemic levels.
5. Robey Warshaw
Robey Warshaw LLP is one of the boutique investment banks based in London. Founded in 2013, the financial advisory firm operates with less than 25 employees. However, Robey Warshaw’s size did not prevent it from playing substantial roles in some of the biggest privately held companies’ mergers of the few prior years.
For example, in 2015, the firm advised BG Group’s merger with Royal Dutch Shell ($70 billion deal) and SABMiller’s merger with Anheuser-Busch InBev ($107 billion deal). In 2018, Robey Warshaw guided Comcast in their successful takeover bid for Sky UK for $40 billion.
Robey Warshaw financial advisory services feature providing advice during mergers and acquisitions, assisting lower middle market firms with venting prospective corporate acquirers, and helping business executives make the right decisions.
Robey Warshaw allegedly charges a flat retainer fee alongside other fees. The company’s reputation among competing advisory firms was earned in Pfizer’s 2014 attempt to merge with AstraZeneca. Robey Warshaw’s advisors assisted AstraZeneca with forestalling the merger, ultimately setting the ground for its today’s success
6. Deutsche Bank
Deutsche Bank was founded in 1870 in Berlin, Germany, and became the most influential financial advisory firm on the European market. Deutsche Bank owns a majority stake in many economy-dictating ventures and is a leading provider of expert business consultancy worldwide.
Operating as a high-profile personal financial advisor, Deutsche Bank contributes to various deals in financial, real estate, mining, and other sectors.
Deutsche Bank supplies a wide range of financial advisory services for mergers and acquisitions, sell-side business valuation, and wealth management.
One of the most outstanding business transactions associated with Deutsche Bank was the Marriott International acquisition of Starwood Hotels & Resorts Worldwide. The transaction was valued at over $14 billion, and Deutsche Bank contributed alongside other advisory firms, including Goldman Sachs.
7. Simmons & Company
Simmons & Company International was founded in 1974 as a financial advisory firm for the energy industry. Like many other investment banks, Simmons & Company supports clients with transaction processing and business advisory.
Despite the seemingly low market share, Simmons & Company is a substantial contributor to the U.S. economy as it assists national core businesses in oil and gas, mining equipment, and alternative energy sources.
Simmons & Company International company offers the standard service set of advisory firms. This includes assisting the acquiring firm with financial advisory services, business strategizing, and mergers and acquisitions due diligence for a flat retainer fee.
In the past four decades, Simmons & Company has firmly established itself as a top-tier partner in various energy sectors. Their global reach extends to a diverse client base, including institutional investors, private and public companies, and private equity firms.
8. Société Générale
Société Générale is one of the oldest European investment banks, founded in 1864 in Paris, France. Originally a smaller company, Société Générale grew into one of the largest strategic consulting business ventures with divisions for financial advisory firms and investment banking capabilities.
Société Générale supports various business transactions with a focus on the ESG sector.
Société Générale is one of the best mergers and acquisitions firms that assists its clients during mergers and acquisitions and other business transactions by providing advice, accurate valuation, and lower middle market expertise.
Alongside other advisory firms, Société Générale offered its financial advisory services during Alstom’s acquisition of Bombardier Transportation, valued at €5.5 billion.
9. Peel Hunt
Peel Hunt LLP was founded in 1989 in London, UK, as a boutique investment banking firm for medium and small businesses and investment institutions. Peel Hunt’s business executives have a substantial track record in financial advisory during IPO launches and M&A.
Additionally, with an average market capitalization of £690 million, Peel Hunt’s impact extends to more than 440 research stocks, maintaining over 1,240 institutional relationships and accounting for 13.3% of trading volumes on the London Stock Exchange (LSE).
As an advisory firm, Peel Hunt operates alongside other investment banks marketing stocks, facilitating fundraisers, advising on investing and divesting ventures, and overseeing acquisitions.
Peel Hunt assists its clients during horizontal merger initiatives, sale transaction processing, and other mergers and acquisitions regardless of the deal volume.
Peel Hunt’s financial advisory services include approaching the selling company for negotiation, networking with other advisory firms to source opportunities, and performing other business transactions on the client’s behalf.
10. Goldman Sachs
Goldman Sachs, founded in 1869 in New York as a small business buying and selling promissory notes in Lower Manhattan, has become one of the largest M&A advisory firms today. Most firms work with the Goldman Sachs advisory firm due to its long history of business and unprecedented levels of resilience during the recent financial crises.
Goldman Sachs supports clients by offering financial advisory services during asset management, mergers and acquisitions, and outstanding stock distribution.
Goldman Sachs’ business legacy creates a huge advantage over most investment banks and advisory firms. Most buyers who work with Goldman Sachs come from the financial sector, particularly stocks and private equity.
Goldman Sachs supports prospective buyers with anything from evaluating the acquiring market share to financing the deal. The most notable recent business transactions advised by Goldman Sachs were Amazon’s acquisitions of Whole Foods Market for $13.7 billion in 2017 and One Medical for $3.9 billion in 2022.
Current M&A trends
- Global M&A decline. Global deal activity has declined by 44% in the first half of 2023, compared to the previous year, primarily due to a strong start in 2022.
- Macroeconomic uncertainty. Ongoing macroeconomic uncertainty, including rising interest rates, is complicating dealmaking and making both buyers and sellers more cautious about the transactions.
- TMT sector strength. Despite capital limitations and geopolitical uncertainties, the technology, media, and telecommunications (TMT) sector maintains its status as the most active sector for mergers and acquisitions in 2023.
- Asia-Pacific M&A decline. Deal volumes in Asia-Pacific declined, with an 8% decrease in the first half of 2023 compared to the second half of 2022. The trend was particularly evident in China, Australia, and South Korea. However, a recovery is expected. Meanwhile, Japan saw foreign investor interest and India’s M&A market remained active.
- EMEA M&A decline. In the EMEA (Europe, Middle East, and Africa) market, the first half of 2023 witnessed a 7% decline in deal volumes compared to the second half of 2022. Despite this, volumes remained higher than pre-pandemic levels in 2019. However, deal values dropped by 25% during the same period, mainly attributed to a decrease in megadeals.
- Signs of optimism. Despite the challenges, some dealmakers remain optimistic, expecting the M&A market to stabilize. They cite reduced valuation declines, substantial available capital from public companies and private equity, and glimpses of economic recovery as confidence boosters.
The M&A market has experienced significant fluctuations in recent years. The total value of M&A transactions in the second quarter of 2023 fell to $732.82 billion, a substantial decline from the $1.14 trillion recorded in the same period in 2022.
An M&A firm specializes in facilitating corporate transactions such as mergers, acquisitions, divestitures, and other strategic deals. They provide services like advisory, market research, valuation, due diligence, deal structuring, financing, legal compliance, and post-merger integration to help clients navigate complex transactions and optimize outcomes.
An example of an M&A transaction is the acquisition of WhatsApp by Facebook. Facebook acquired WhatsApp, a popular messaging app, for $19 billion in cash and stock. This strategic move allowed Facebook to expand its reach in the messaging space and gain access to WhatsApp’s large user base.
The current state of the M&A market is marked by a significant decline, with the global M&A market value down by 44% year to date. This is primarily due to factors like economic conditions, global tensions, and changing regulations.