New Year's Eve: A dead year for deals

Investment bankers will look back on 2023 as an unmitigated disaster for corporate dealmaking. Global mergers and acquisitions volume plummeted to roughly $3 trillion, marking a decade low and leaving advisory fees severely depleted. The collapse was not caused by a lack of corporate ambition, but by the violent reset in the global cost of capital.

The Financing Freeze

With benchmark interest rates soaring, the leveraged buyout engine that powered private equity dealmaking ground to a complete standstill. Syndicated loan markets balked at underwriting multi-billion-dollar buyouts, private credit funds demanded punitive coupons, and valuation gaps between optimistic sellers and rate-conscious buyers proved insurmountable. Without cheap leverage, financial engineering loses its magic.

The 2023 dealmaking drought proved that modern corporate M&A was an addictive by-product of zero interest rates, leaving investment banks to endure the painful hangover of high funding costs.