MARKET UPDATE
We anticipate accelerating deal activity in the 2nd half of the year. We expect healthcare and tech to continue to lead the charge. Within healthcare, we will see an increase in M&A, including megadeals in healthcare services and life sciences. Digital Health will be another area of M&A activity as start-ups consolidate as a result of the post-covid bubble. A.I., Data Centers, and Fin Tech will lead the tech sector. We will also see deals in fiber expansion, satellite technology, and renewable, green technology. Private Equity firms are deploying capital at a more normalized rate. PE and sponsor-backed deals typically account for roughly 40% of the deals in the market. Over the last few years, this rate has been closer to 20-30%, which is one reason why M&A has been down in the last few years. We are starting to see more Private Equity deals in the market as conditions for deal activity improve. Sponsors are dual-tracking IPOs and M&A as potential exits. Banks will struggle the first part of the year to close deals because they do not have the execution support. Due to the drought of M&A activity, many juniors have not received proper deal reps to handle a frothy M&A market. This lack of experience will have an adverse impact on M&A fees for some banks.
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