M&A and IPO activities drop sharply due to recession and trade war fears

The additional tariffs Trump announced on April 2, ranging from 10% to 50%, have raised fears of a recession and an escalating trade war, fears that have been reinforced by retaliatory policies from many of America’s trading partners.

This is evident in the wave of stock sell-offs globally as well as the postponement of IPOs and M&A deals.

Swedish fintech company Klarna, for example, has canceled its IPO; San Francisco fintech company Chime is also delaying its initial public offering, according to people familiar with the deals.

Meanwhile, a London private equity firm pulled out of a last-minute bid for a European mid-cap tech company on Thursday (April 3), following news of tariffs, a person close to the deal said.

StubHub, meanwhile, had set a Thursday date for an investor roadshow next week for its IPO. But by the end of the day, executives had decided to postpone those plans for at least another week.

eToro - The Israel-based financial services company has also postponed investor presentations for its Wall Street IPO until after April 20 due to market conditions and volatility, according to a person familiar with the deal.

“It will be difficult to complete any deal as debt costs are expected to rise and it will be harder to determine valuations of companies,” said a senior banker.

If this trend continues, it could stifle companies' ability to raise capital and invest, further slowing economic growth.

Even before the latest tariff announcement on April 2, Mr Trump’s previous tariffs and trade concerns contributed to a 13% drop in US mergers and acquisitions in the first quarter, Dealogic data compiled for Reuters showed.

“It’s not the tariffs that are the problem,” said Antony Walsh, corporate M&A partner at law firm Eversheds Sutherland. “It’s the level of uncertainty that comes with them that’s having the biggest impact on C-suite confidence.”

Indeed, the trade war has roiled global markets, with the S&P 500 and other US indexes posting their worst losses since 2020 on Thursday and falling further on Friday following China's retaliatory tariff announcement.

Investment bank JP Morgan has raised its odds of a US recession by year-end to 60%, up from 40%.

The London private equity investor that called off the purchase of the European technology company said market turmoil on Thursday prevented it from proceeding.

“We can’t proceed… We don’t know how Europe will react, what all this means for the macro environment, the trade war,…” he said, asking not to be named because the deal is not public.

At StubHub, executives plan to wait at least another week, possibly even after Easter, before trying to sell their shares to Wall Street, largely to give the market time to calm down.

Tom Godwin, partner at global law firm Freshfields, said there is too much uncertainty in the markets right now, coupled with mixed messages from the Trump administration creating more chaos in the markets.

Philipp Suess, head of capital markets and equities for Germany and Austria at Goldman Sachs, said that large IPOs that were expected to materialize did not materialize due to market volatility, without commenting on specific deals. “It is clear that after Wednesday night, the IPO pipeline has become more difficult,” he told Reuters in an interview.

Source: https://thoibaonganhang.vn/hoat-dong-ma-ipo-giam-manh-vi-noi-lo-suy-thoai-va-thuong-chien-162329.html