End of buy-out boom signals runs on investment banks – M&A bubble burst leads the financial meltdown
Peter Oberois
Jun. 27, 2008

Some predicted that after the subprime it would be the credit card sector that will collapse and lead the financial meltdown. Now it is clear that it will be that plus the burst of the M&A bubble that is leading the financial meltdown.

Last year the M&A boom saw a whopping $1,9000bn. This year the pace is slower by close to 40% - a drop year over year never seen before.

Goldman Sachs , JPMorgan, Citigroup and Deutsche Bank. Are the top four investment bankers that registered the top M&A activities this year. Their investment banking recvenue is lower by 32%.

Deal making revenue is also down for the legal firms that specialize in M&A.

According to some analysts, investment banking will lead the real financial meltdown. The bubble in this sector is far bigger than that in real estate.

Interestingly the private equity led M&A activities are on a sharp retreat. The private equity funds are trembling with the after shocks of subprime meltdown. The M&A activities at this stage is led by companies that see real values in other companies and are acquiring them for strategic business reasons.

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