Although the exact start date will likely differ depending on who you talk to, and where in the world, it is widely acknowledged that this month marks the 10-year anniversary of the first signs of the financial crisis which swept across the globe.
Here, experts from the Deals Intelligence, Lipper and Oil Research teams at Thomson Reuters take a look at what impact the last 10 years have had on their industries.
Insights from the Deals Intelligence team looked at the evolution of M&A advisory fees earned in 2007 and so far this year, with a focus on “boutiques” – in other words, those firms earning more than 85 percent of their total investment banking fees from mergers and acquisitions (M&A) and equity capital markets (ECM), with M&A accounting for at least 70 percent of those fees.
Top banks see value of fees fall 30 percent from 2007 as they lose four percent share
It is estimated that the top five M&A fee earning banks have shared a combined $5.3 billion in M&A fees so far this year, down 30 percent from $7.6 billion YTD 2007. The combined fees of Goldman Sachs, JP Morgan, Morgan Stanley, Bank of America Merrill Lynch and Citi account for 33 percent of the total available fee pool this year, down from 37 percent in 2007. Their combined share has recovered from a low of 27 percent in 2012.
Boutiques claim extra 11 percent of M&A fee pool post-financial crisis
Completed M&A transactions have generated $16.0 billion in advisory fees so far during 2017, down 1.1 percent from this time last year and down 23 percent from the all-time year-to-date high of $20.7 billion recorded before the financial crisis hit in 2007.
$5.1 billion worth of M&A advisory fees have been earned globally by boutiques so far this year, 16 percent more than at this time in 2007 (although six percent less than last year). This year’s total is the third highest annual start since our records began in 2000.
Boutiques have earned an estimated 32 percent of 2017’s M&A advisory fee pool so far, picking up an extra 11 percent from their 21 percent share in 2007.
Three of top 10 M&A advisory fee earners are boutiques, compared to one a decade ago
Three boutique banks currently hold top 10 positions in the 2017 Global Completed M&A fee ranking, compared to just one at this time in 2007.
Thomson Reuters has recorded completed M&A advisory fee earnings from 685 boutique advisory firms so far this year, compared to 561 in 2007. Some 45 of the top 100 M&A advisory fee earners so far this year are boutiques, compared to 37 in 2007.
According to Shakil Begg, Head of Oil Research & Forecasts at Thomson Reuters, like other markets, oil prices have undergone dramatic changes over the past decade – some of which were directly related to the fall-out from the financial crisis; while others were caused by seismic changes in fundamentals.
Compared to the start of August 2007, the front month Brent crude futures contract is down over 30 percent at current prices. However, the dramatic rise to nearly $150 during the summer of 2008 and the subsequent price crash have seen volatility in oil spike to record highs.
Global QE and OPEC’s intervention to clear excess supplies helped oil to recover, though robust emerging market demand particularly from Asia was instrumental in driving a sustainable recovery.
The cyclical nature of the oil industry influenced price action for much of the decade as oil price shocks first curtailed investment and later drove innovation and expenditure in higher cost production.
In many ways the oil market is facing similar fundamental (oversupply) concerns it faced during the end of 2008 but with economic growth and oil demand at much healthier levels, the dynamics of the industry are notably different.
Oil in the post-financial crisis era: Has it truly recovered?
Data from Thomson Reuters Lipper highlights the total net assets (TNA) and fund closures in the US since the beginning of the crisis.
Explore more of our Financial Crisis 10-year coverage: A decade in charts