Could we get a big deal done this year, please.
Despite several headline-grabbing deals being announced such as JAB Holdings buying Dr. Pepper Snapple (DPS) for $18.7 billion and General Mills (GIS) eating up Blue Buffalo (BUFF) for $8 billion, there hasn't been a steady stream of activity as seen in 2017. During February, completed M&A volume fell 25% year over year to $232 billion, according to Credit Suisse. M&A volume dropped 14% from January. Looking at the first-quarter's run rate, completed M&A volume is tracking down 18% from the prior year.
Looking at February, the global investment banking fee pool of $3.9 billion fell 38% year over year, and 39% from January.
Investment bankers shouldn't feel too gloomy, however.
In February, the pace of new deal announcements tallied $261 billion, up 42% from a year ago. Announced M&A was the hottest in the internet technology, energy, financials and consumer sectors.
"Ask the management of any advisory company what it takes for M&A to increase, and they will tell you it's CEO confidence," said Credit Suisse. "As of the last update, U.S. CEO confidence has increased to 63 (4Q17 is the latest data point) from a reading of 59 in the prior quarter-a reading of more than 50 points reflects more positive than negative responses."
CEO of serial acquirer Tyson Foods Inc. (TSN) , Tom Hayes, told TheStreet,"We are on the hunt [for deals]." Hayes said Tyson's debt-to-Ebitda ratio should fall below a key internal target by the third quarter, opening up the path to go big on a deal.
But Hayes cautioned that with valuations "hot" right now, doing a deal of any size isn't guaranteed. "It's a seller's market," Hayes said.