An already-rough year for Wall Street dealmakers has likely just gotten worse.
Britain’s historic decision on Thursday to leave the European Union has, among other things, spelled bad news for the mergers-and-acquisitions market.
“We believe the M&A advisors could be one of the most negatively impacted sectors from the UK’s decision to leave the European Union, particularly in the near-term,” Goldman Sachs analyst Richard Ramsden wrote in a note on Monday.
For one thing, uncertainty in the market and slower economic growth could “heavily discount” future M&A revenue, Ramsden wrote.
That’s particularly likely in Europe, which accounts for 30% of global M&A activity. UK M&A is already down 85% year-on-year in the second quarter, according to the note.
M&A-focused boutique banks are already seeing their stocks plummet: Lazard, PJT Partners, and Evercore’s stocks were down more than 11% around noon ET on Monday.
That said, in the long-term, Brexit could actually boost M&A.
“A lower British pound, lower rates and slower growth could all prove conducive to M&A,” Ramsden wrote.
Nevertheless, here is the downside Ramsden is forecasting for boutique banks: