M&A jobs in the City of London aren’t nearly as safe as they used to be. This time last year, M&A advisory businesses were a growth area and banks were busily hiring analysts and associates to help pitch for and execute deals. One year on, and UK-targeted M&A by value was down 65% in the first half of 2016, according to Dealogic. With M&A fees (and therefore revenues) based on deal value, this doesn’t augur well in an industry that’s cutting costs.
Not all M&A sectors are equal, however. While 2016 has been very bad for UK M&A bankers as a whole, it’s been very good for UK M&A bankers in some particular sectors.
As the chart below shows, UK M&A bankers working on utilities and energy deals are having a truly great year. On the other hand, UK M&A bankers working on oil and gas deals have seen their business fall apart.
Despite a 97% decline in deals by value, recruiters say even energy-focused bankers in London have so far kept their jobs. Only Nomura and Goldman Sachs are known to have let go of IBD bankers in the City lately and Goldman’s layoffs were pretty gentle with no more than 20 people invited to vacate their desks.
Unless deals pick up, this stalemate is unlikely to last. Most banks greet an initial decline in M&A activity with vigorous pitching as they attempt to win new clients. If this pitching falls upon deaf ears, cuts are likely later in the year. David Archer, director at recruitment firm Circle Square, says junior bankers are well aware of this: “People are having to work harder than ever, but they’re expecting to be laid off. Morale in the M&A teams of U.S. banks in London is very low.”
Photo credit: triloks