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How Ma Is Getting Less Lucrative For Wall Street

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by Felix Salmon
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Jun 23 2008 12:00am EDT

How M&A is Getting Less Lucrative for Wall Street

The M&A industry is struggling, now that financial buyers (private-equity shops) can't snap up companies willy-nilly using cheap debt. On the other hand, if this morning's news is anything to go buy, friendly strategic deals using equity rather than debt are all the rage: Bunge is buying Corn Products International for $4.4 billion in stock, and garbage company Republic Services is buying Allied Waste Industries for $6.1 billion in stock.

These deals are much less profitable for investment banks than acquisitions which require a lot of financing. But there's no reason why industry consolidation should always be accompanied by enormous profits on Wall Street. I have no opinion on whether these deals are good or bad. But insofar as they don't involve paying monster fees to banks and lawyers, they're probably doing something right.

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