“Right now is really the first time since the financial crisis that we’re seeing the light at the end of the tunnel,” says Kenneth Jacobs (pictured, right), CEO, Lazard Ltd. (NYSE: LAZ) .“We’re seeing real seeds of an economic recovery, which will result in more confidence, and the M&A cycle will kick in,” says Jacobs, speaking at the Bloomberg Markets 50 Summit on Sept. 24, five years after the collapse of Lehman Brothers.
“The M&A cycle that has started now is more for corporates than for private equity firms,” says James Lee (pictured, below), vice chairman, JPMorgan Chase & Co. (NYSE: JPM), who also spoke at the gathering, held at the New York-Historical Society.
Dealmakers are taking encouragement from the large deals announced in September. The most notable were Microsoft Corp.’s (Nasdaq: MSFT) purchase of Nokia Oyj’s handset unit and patent licenses for $7.2 billion and Verizon Communications Inc.’s (NYSE: VZ) deal to buy Vodafone Group plc (Nasdaq: VOD) out of its U.S. wireless business for $130 billion. If the Verizon deal closes, it will be one of the biggest transactions in U.S. history.
“Over the next several years, we’re going to see very large, prominent transactions continue what just started at the beginning of September,” Lee predicts.
Jacobs also points to a “significant amount of activity in the middle market.”
“On balance, it’s a better time to be a seller than a buyer,” says Stephen Schwarzman (pictured, left), founder of the Blackstone Group LP (NYSE: BX). “The Fed has moved rates so low that buyers can finance these deals at high prices. On the other hand, it’s tougher to buy. Leverage is abundant, and cost is low, but sometimes that value goes to sellers rather than to buyers.”