Photograph by Spencer Platt—Getty Images

It's the largest hit since the financial crisis.

By Lucinda Shen
May 5, 2016

After patting themselves on the backs for a record breaking year for dealmaking in 2015, banks are undoubtedly heaving an enormous sigh of dismay at what the new year has brought for mergers and acquisitions.

The level of busted deals has not been this high since the start of the financial crisis in 2007, according to financial consulting firm, Dealogic.

As regulators put more pressure on mergers and acquisitions in 2016, roughly $481 billion worth in deals have been cut short, according to research firm Dealogic. Nine years ago, $506 billion worth in deals were withdrawn. Among the priciest deals that now lie in the graveyard include Pfizer’s withdrawal of its $160 billion bid for Allergan, the $103 billion deal between Honeywell International and United Technologies, and the $34.6 billion Halliburton-Baker Hughes deal.

And as each of those multi-billion dollar deals burst, so goes potential fees for investment banks. According to Dealogic, the M&A withdrawals have cost investment banks roughly $1.2 billion in potential fees. Wall Street firms, unlike say law firms, don’t bill by the hour, and typically only collect the majority of fees only after a is deal successfully completed.

It’s a different picture from 2015, when global M&A volume broke the record, with bank revenue stemming from global deals in 2015 reaching $24 billion and deal volume surpassing $5 trillion.

 

That became a point of pride for banks, especially the top two dealmakers, Goldman Sachs gs and J.P. Morgan Chase jpm , who touted higher earnings from their investment banking divisions due to heavy M&A volume in 2015. M&A revenue accounted for about 39% of investment banking revenue for Goldman Sachs, and 31% for J.P. Morgan in 2015.

So far in 2016, J.P. Morgan has lost out on about $198.9 million in fees from M&A advising; Morgan Stanley, $181.6 million; and Goldman Sachs, $145.7 million.

Meanwhile, while most firms are expecting a lower level of deals in 2016 in comparison to the year before, a number of deal makers are still optimistic that the market won’t collapse as much as predict. They say that heavier interest from foreign nations and cheaper valuations on companies in certain sectors, including oil, will continue to drive deals.

“We hit a record year in 2015 and 2016 is set to be a very strong positive year as well,” Pip McCrostie, the vice chair of Transactions Advisory Services at Ernst and Young told CNBC. “Not as toppy as 2015 but very robust. It is driven by key factors such as continued cost cutting and operational efficiency driving consolidation.”

Dealogic has also predicted that 2016 will be filled with smaller deals than the mega, 12-digit deals that defined 2015. A string of smaller deals also often net larger fees, as a percent of the deal, for banks. For example, a deal worth $5 billion nets a fee of .96%, while a deal below $500 million brings in 1.2%-to-2.5%, according to 2014 data from Thomson Reuters as first reported by the New York Times.

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