00:00Can this year be saved? Is 2026 going to be the year of M&A returned?
00:04Well, the great thing about M&A practitioners is it's always a good time for M&A,
00:09so they always predict it's going to be great.
00:11But there's actually a couple of things that are holding it back.
00:15One is that market valuations are actually pretty high.
00:18If you look at the market and what it's trading at, you know, forward earnings,
00:23it's very, very high by historical standards.
00:26So it's hard to do deals other than all stock deals.
00:30And there's also some volatility in the market.
00:32So certainly in the sectors you talked about, which is AI, software, and the like,
00:37very hard to do deals when there's a lot of volatility.
00:40So I'm not surprised that the deal market's down.
00:44Does it seem jumpy enough, though, that this is kind of the rest of 2026?
00:49Because I don't know how we solve the AI problem.
00:51We're not going to know where that goes for some time.
00:53So do we just have to contend with this is the kind of world we're living in for M&A
00:57right now?
00:58I actually do think it's going to be somewhat muted this year.
01:01I don't see any particular, I don't think any kind of trigger that's going to cause it to pick up.
01:08You know, people need to do M&A.
01:10I mean, companies need to do it.
01:12It's very hard to get organic growth.
01:13So there is a need for it.
01:16But with valuation so high, I just think it's difficult to do.
01:20So you've advised many companies through moments of crisis.
01:24You were the top of M&A at Morgan Stanley during the financial crisis.
01:30Jamie Dimon recently said that he sees echoes of that period starting to form now.
01:34Given your experience then, are you seeing the same thing?
01:38Well, Jamie is a very smart guy, so I actually take his point.
01:43I do think there's some similarities in that the entire—I'm not smart enough to know if crypto is good or
01:51bad or valuable or not.
01:53But when you go through these cycles, you do have pools of assets that people are concerned about.
01:59And whether they prove right or wrong, who knows?
02:02But one of them is crypto.
02:03Another one is credit funds.
02:04They may all be fine.
02:06But there, in fact, may be a trigger.
02:08And what is at least concerning to me is the high valuations in the market.
02:15That if we do have something triggering that, it could be a difficult time.
02:19What would that difficult time look like?
02:21Well, I wouldn't be surprised to see a drop in the market of, you know, 10 to 20 percent of
02:26the market.
02:28Which, again, given how it's gone up so much in the last couple of years, would not be all that
02:32difficult.
02:32I think from an M&A perspective, that might actually be good.
02:35It might be bringing more people into the market.
02:37I was going to say, because in moments of disruption, there are always these big opportunistic moments.
02:41I mean, financial crisis, Bank of America, Merrill Lynch.
02:44There's a long litany of lists.
02:46Do you think that if we get to that moment, what might be the thing we look back at and
02:50say,
02:50that was the big opportunity?
02:51What could be the big opportunity this time in a market shakeout?
02:54Yeah, well, we don't really know, you know, which industries are going to cause it.
02:59Or it's industries that are going to emerge from it.
03:02So I really don't know.
03:04I must say, having been in this business a very long time, you know, I was in London.
03:09I know you spent some time in London.
03:10I was in London on Black Monday.
03:12I mean, I've lived through a lot of these cycles.
03:14I've lived through the dot-com bubble.
03:17And, you know, the last deal I did when I was a lawyer last time was AOL Time Warner.
03:22And look how that worked out.
03:23I was just a lawyer.
03:24I wasn't a banker.
03:25Important caveat.
03:26Thank you, Rob.
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