Wall Street boutique investment bank Moelis & Company is expecting the rate of mergers and acquisitions to continue its climb as retailers struggle to compete with Amazon.
“There’s a fundamental need to rationalize that people want to get larger to fight online, to fight Amazon in retail specifically,” founder and chief executive Ken Moelis told investors on a conference call Monday afternoon.
Moelis said that there would be both acquisitions and restructuring activity in the retail sector, though he said he didn’t think advising on restructuring in the retail sector would be as big an opportunity as advising on similar work in the energy sector.
“There’s a lot of restructuring going on in the retail business,” he said. “But a lot of those are smaller companies who are just kind of closing stores and shutting down in some cases.”
Americas M&A volume was muted during the first half of 2017, coming in flat compared to the first half of 2016 with $US892.5 billion in activity, according to Thomson Reuters. However, Amazon’s $US13.7 billion deal for Whole Foods has had a ripple effect across sectors, forcing CEOs across corporate America to wonder whether they are Amazon proof.
For the first half of 2017, Moelis & Co reported revenue of $US345 million — 34% higher than the same period last year. The firm will also pay a quarterly dividend of $US0.34 per share next month.
Moelis & Co. has advised on many large deals in the past decade. Just after the firm’s founding in 2007 it advised Hilton on its $US26.5 billion sale to The Blackstone Group, Anheuser Busch’s $US61.2 billion sale to InBev, and most recently, Tribune Media Company’s pending $US6.6 billion sale to Sinclair Broadcasting Group.
Since its last earnings report, the firm has hired several new managing directors, both domestically and in the UK, to focus on fintech and industrial tech, two areas Moelis noted were “highly active.”
“Fintech has been a part of where we want to have been for a long time,” Moelis said. “It’s very active and there’s a lot of companies in it.”
Shares of the firm rose 7% following the earnings beat.