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Investment Banking

Industry Outlook

The outlook for the investment banking industry is mixed. The positive: Worldwide merger and acquisition deal values reached nearly $4.1 trillion during full year 2018, according to the Institute for Mergers, Acquisitions and Alliances, a 15 percent increase from 2014 levels and the strongest annual period for worldwide deal making since 2007 (at the height of the financial crisis). Corporate earnings have been robust in recent years, and U.S. companies are still sitting on a mountain of cash, which could be readily deployed in the next round of acquisitions. The negative: The industry is not generating as much revenue as it used to, and it is facing increasing competition for business and changing financial trends. “The investment banking industry as a whole has to deal with the fact that many companies are delaying public offerings or opting for direct listings that de-emphasize the role of banks,” according to CNN Business. “Additionally, trading since the financial crisis has not been a reliable source of income. Even industry leaders are being forced to adjust. Goldman Sachs, for example, is undergoing a multi-year effort to build out new business lines that could prop up faltering trading returns.”

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