Mergers and acquisitions will pick up in the first half of next year as confidence returns to the leveraged finance market, according to Ingrid Hengster, Barclays Plc’s Chief Executive Officer for Germany.
(Bloomberg) — Mergers and acquisitions will pick up in the first half of next year as confidence returns to the leveraged finance market, according to Ingrid Hengster, Barclays Plc’s Chief Executive Officer for Germany.
“We see a real change and the first signals that the market is really picking up,” Hengster said during a panel discussion at Bloomberg’s Future of Finance conference in Frankfurt on Tuesday.
She said the bank is now having more conversations with both strategic and financial buyers around dealmaking as peaking interest rates help reduce volatility.
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Hengster was speaking as bankers contend with a second consecutive year of heavily depressed deal values. A lack of bank financing has effectively shut off the market for debt-fuelled private equity buyouts, a lifeblood of M&A dealflow. But the Barclays executive said banks were rediscovering their appetite for lending.
“For larger transactions, banks are back,” Hengster said. “You need a buyer universe that is in a position to deliver the financing.”
Christian Ollig, partner and head of the German-speaking region at KKR & Co., cautioned there will be no quick return to $10 billion-plus transactions while financing markets continue their recovery — even with private credit providers ready to step in.
“At the end of the day it’s also a risk-return question,” Ollig said on the same panel. “You need to take into account higher financing costs, so this has an impact on valuations.”
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