Mergers and acquisitions deal volumes are on way to break annual records, even as investment bankers have negotiated almost entirely over zoom. Now there are clear message to dealmakers – get back on the road.
Competition for deal fees is tougher than ever and bankers say those who make the effort to court clients have an advantage. Slightly eased travel restrictions mean bankers can get back to building up their contact lists. September was the turning point they say, bars and offices somewhat fuller and clients are more comfortable with gatherings and at least some sense of normality.
Head of M&A for Europe, the Middle East and Africa (Emea) at Citigroup, Alison Harding-Jones said: “We are absolutely getting back on the road. Face-to-face interaction with clients is critical.” In pre-pandemic times, senior M&A bankers would typically spend up to four days a week travelling. While Covid-19 restrictions have grounded high-flying dealmakers, there has been no let up from their extremely busy schedule.
Global deal volumes have hit more than $4tn in the first three quarters of last year, according to data provider Dealogic, and are expected to hit record levels with figures (to come) to the end of 2021. The $1.1tn in technology M&A is by far the biggest sector – more than double the $428bn in healthcare.
The novelty of zoom meetings has long worn thin. Senior bankers have had their calendars booked out for months, moving from one virtual call to another in working days that stretch into nights and weekends. Some bankers have said that one of the reasons for the current deal boom was the lack of air travel, which has allowed more meetings.
“People are just exhausted,” said one senior dealmaker. I’ve been busy during my 20 years in the City (financial district) but the intensity of the current workload, combined with working on video calls has been relentless.” The UK has relaxed some of its travel restrictions for some countries, which allow people to visit them without quarantining on their return. Meanwhile, the US had said back in September that it would reopen to vaccinated air travellers from 33 countries, including most of Europe, from last November. Bankers say, in recent weeks, clients have become more comfortable with in-person meetings.
“September has really been the turning point for reconnecting with clients in person,” said Guillermo Baygual, co-head of M&A for JPMorgan in Emea. Clients are more receptive to it. While M&A surged in 2021, there has been a lack of big-ticket deals, with transactions worth between $1bn and $10bn more than doubling on 2020 and just one – AT&T’s spinoff of its media operations to Discovery – greater than $50bn. These smaller deals are easier to execute virtually, bankers said.
“A lot of the analysis of the deals, due diligence and day-to-day can be done virtually,” said Baygual. “We’re going to travel less – perhaps two days a week instead of four – but we need to build trust with clients. It’s a lot easier to seal a deal with a handshake than over zoom.” Harding-Jones said: “People are looking at travelling again, but I don’t think it will reach pre-pandemic levels, for practical as well as environmental reasons.” Bankers have been handing more responsibility to sector-focused dealmakers in continental Europe in recent months, dealmakers say.
The bolstering of teams in EU countries since Brexit has helped banks maintain client relationships, but senior M&A London bankers are keen for in-person meetings again. Competitive pressures are also likely to force dealmakers back on the road. (The writer is our foreign correspondent based in the UK)
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