Silver as an investment

This is How “Tech” Paid $5 Billion in Fees to Wall Street in 2016, and What it Got for it

wolfstreet.com / By Wolf Richter / 

Despite a plunge in overall US M&A, Tech deals soar.

Investment banks have not been very lucky in extracting fees from Corporate America so far this year, and overall fee income has plunged 18% from the same period last year. But there was one standout: technology companies.

Nowadays “tech” includes non-tech companies such as shopping sites, home-delivery apps for beer, anything having to do with the new gig economy, anything that takes place on a device, rather than inside a brick-and-mortar location.

These tech companies have handed Wall Street investment banks $5 billion so far this year in fees related to Mergers & Acquisitions – up 5% from the same period last year – for advice on M&A and handling the associated debt deals, equity underwriting, and syndicated loans.

That’s the highest amount paid since dotcom-year 2000 when they’d paid $8.3 billion, according to Dealogic.

The tech M&A boom came into full bloom last year and is continuing this year. Since January 2015, tech companies have announced $1 trillion in deals, according to Dealogic, cited by the Wall Street Journal. Investment banks make money on numerous aspects of these deals, coming and going. Advising on deals alone generated 42% of the fees. But there are also bonds, syndicated loans, and, sometimes peculiar, equity offerings involved.

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