As communications and globalization keep their sharp head development towards market integration, so Corporate Finance does. Nowadays we are witnessing new phases of capitalism in which flexibility, exploration, and experimentation are the daily bread of organizations. This way the Corporate Finance practice is bouncing in several directions adopting the whims of the new system which is the reflect of new leaders, new generations, and new values. Recent news such as BNP Paribas merging staff to create a €110 billion investment group, record number of investors in the United States saying stock markets are in a bubble, or asset managers in the United Kingdom urging to unite over a social impact investing fund of £150 billion, are perfect examples of the current landscape.
These trends are there for specialists to capitalize on. Corporate Finance professionals play a significant role in the articulation of the happenings. Investment bankers are jumping through cross-border deals reaching historical records since 2007, advisory teams in consulting and accounting firms including the big four are taking their part of the pie, therefore the lines dividing corporate finance practices among industries are blurring. As a result of this agenda, besides the administrative role of corporate financiers, the number of professionals and firms interested in having an active role in valuations and selling & buying mandates has been rising as well.
Moreover, the number of small deals (below USD $100 million) and middle market deals (USD $100 million – USD $1 billion) is expected to increase. There is vibrant momentum in economies worldwide as more information is available in the market and changing behavior of individuals and industries move towards new challenges. According to sources such as Bloomberg and Thompson Reuters, there are trends in M&A’s pointing out the fast pace of transactions and the shortening ownership time of corporations and businesses. This recalls the economic identity of the quantitative theory of money, in which prices are a function of money velocity (increased number of transactions), reflecting the trends in the increase of median ticket deal prize in a decade globally.
Furthermore, family offices and investment groups have been broadening their portfolio and want to incur in several types of business industries. Venture capitalists are no longer capitalists but entrepreneurs, and innovation is being seen as the new experiment route in which new generations can interact with older generations.
All of this is an exquisite cocktail for firms, professionals, and analysts around the globe to keep capitalizing on the market opportunities. Nevertheless, as Corporate Finance roles seem to be merging, firms and professionals are expected to not stay as commodities. In the information era, numbers and technical knowledge is everywhere so understanding human motivations is the new most wanted ability in the corporate finance world.
Santiago Herrera, Auren Colombia