Key facts
- Wall Street banks report robust deal pipelines and continued client engagement.
- Executives believe deals are more likely to be delayed than canceled due to market volatility and rising bond yields.
- Global M&A volumes decreased 41% to $993 billion in the third quarter.
- US IPO activity has slowed, with several high-profile companies postponing their offerings.
- Biotech remains one of the few sectors drawing investor interest in the IPO market.
Wall Street banks are expressing optimism about the investment banking landscape, citing strong deal pipelines and ongoing client discussions despite market volatility and rising interest rates. Executives from major banks like JPMorgan, Citigroup, Morgan Stanley, and Goldman Sachs indicated that while some transactions might be delayed, they are unlikely to be canceled entirely, as businesses are keen to execute deals.
Citigroup CEO Jane Fraser described the overall sentiment for dealmaking as constructive, noting continued capital expenditure and active strategic discussions among clients. She highlighted that while Europe and Asia are showing some pickup, the US remains the primary center for advisory and capital markets activity. Despite navigating various global roadblocks over the past year, such as tariffs and Middle East conflicts, the dealmaking recovery has not been derailed.
However, analysts remain cautious about the near-term outlook for investment banking due to higher borrowing costs and valuation uncertainties. Global M&A volumes saw a significant drop, falling 41% from the previous quarter to $993 billion in the third quarter, marking the first time since the second quarter of 2025 that volumes fell below $1 trillion, largely due to a decrease in megadeals. The IPO market has also experienced a slowdown since the summer, with volatile markets and valuation concerns making investors more selective and complicating public listing plans. Several high-profile companies, including Holtec and Oura, have postponed their IPOs, and SoftBank-backed SB Energy has also delayed its US IPO roadshow. Goldman Sachs CEO Solomon noted that while the IPO market was previously wide open, companies are now facing valuation gaps of 10% to 15%. Morgan Stanley's CFO Sharon Yeshaya suggested that transactions might resume once companies become more comfortable with new valuations. The IPO window has narrowed, with biotech being one of the few sectors still attracting investor interest in a higher-rate environment.