Evercore Warns of Geopolitical Risks to Strong M&A Rebound

(Bloomberg) -- Evercore Inc. warned that geopolitics is the greatest risk to a recovery in mergers and acquisitions this year, as the firm reported revenue that beat expectations in a positive sign for a sector looking to rebound after a prolonged dealmaking slump.

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The independent investment bank, which also helps clients restructure debt and navigate policy questions, said it was seeing strong momentum in the market, but cautioned against expecting a surge in deals anytime soon.

“I don’t see it really accelerating into a deal frenzy for quite some time,” Chief Executive Officer John Weinberg said on a call with analysts, adding that the main risks to a rebound are coming from global conflicts rather than questions associated with the US election. “The really big concern is actually, more than anything else, geopolitical.”

Investors are gauging the mood for mergers and acquisitions after a muted year for dealmaking in 2023. With the Federal Reserve expected to lower interest rates this year, conditions are ripe for more transactions, though uncertainties over international relations and US politics may temper enthusiasm.

Weinberg’s focus on geopolitics differed from comments by PJT Partners’ Paul Taubman last week, who warned that clients may be under-appreciating the risk of the US election, which he suggested may trigger a slowdown in deals as buyers and sellers evaluate policy risks.

“We don’t think that there is really anything regarding the election that is putting a damper on people’s willingness or interest in strategic dialogue and doing deals,” Evercore’s Weinberg said Wednesday.

The investment bank reported adjusted net revenue of $790 million for the fourth quarter, higher than the $716 million average estimate of analysts surveyed by Bloomberg.

Evercore, which is the first of its peers to report results this year, has worked on some of the largest deals so far in 2024. The firm advised Global Infrastructure Partners on its sale to BlackRock Inc. for about $12.5 billion and is working with chip-design company Synopsys Inc. on its $34 billion acquisition of Ansys Inc.

Read More: US Election Will Increase M&A Volatility, PJT’s Taubman Says

In addition to aggressively hiring bankers last year, Evercore said Tuesday that Sarah Bianchi had rejoined the firm as a senior managing director and chief strategist of international political affairs and public policy. Bianchi, who led the firm’s public-policy research team from 2019 to 2021, was most recently a deputy US trade representative, overseeing relationships in Asia and Africa.

Lazard Inc. and Houlihan Lokey Inc. are set to report earnings on Thursday, while peers including Moelis & Co., PJT Partners Inc. and Perella Weinberg Partners LP are due next week.

Shares of Evercore climbed 0.7% to $177.45 at 10:07 a.m. in New York. They’re up 3.7% this year.

Read an Earnings Snapshot: Evercore 4Q Adjusted EPS Beats Estimates

(Updates with CEO comments starting in third paragraph.)

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