May 2, 2023 - Economy

Dealmakers doldrums permeate the Milken Global Conference

Illustration of a one-dollar bill with the denomination reading NOPE.

Illustration: Brendan Lynch/Axios

Dealmakers don't know what to do, paralyzed by macro and market flux, so they aren't doing much of anything at all.

  • That's a big takeaway from Day 1 at the Milken Global Conference in Los Angeles, where the Beverly Hilton hallways are packed full of bankers, investors, politicians and former NBA player John Salley.

What to know: No one is particularly panicked. Not even about the U.S. debt ceiling, which Treasury Secretary Janet Yellen now says we could smack in less than a month.

  • No matter the challenge, consensus is that it will be solved by the passage of time and the prevailing of cooler heads.
  • That's the sort of conditioned optimism you get after more than a decade of green lights, although that isn't to say it's necessarily wrong.

The macro concerns are mostly around rates, with the Fed beginning its two-day meeting today, but also the debt ceiling, U.S. economic growth slowing and efforts to decouple from China.

The market concerns are mostly around pricing, with wide gaps remaining between buyer and seller expectations. Plus regulatory pressures and financing costs, which partially returns to the issue of rates.

The bottom line: Yes, there are still some deals being done. But transformational M&A is largely on hold, with the possible exception of biotech, as are most sales of top-tier companies.

  • As one private equity exec asked: "If you don't need to sell a company right now, why would you?"
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