What to Do if M&A Slows

What happens if the M&A bubble bursts? With financial storm clouds gathering - not least the shaky housing market here in the U.S. - it's worth M&A specialists giving some thought to what they'll do if the boom turns sour.

One answer may be to offer restructuring advice. Banks like Goldman Sachs have been building their practices in this area since July. Roger Ehrenberg, former chief executive Deutsche Bank Advisors, recently said that while economic downturns normally dampen M&A activity, they can also "turbocharge" restructuring activity.

Another answer may lie in hedge funds. A recent report from Reuters suggests that event-driven funds are likely to do well next year (albeit on the back of a continued M&A boom). Recruiters say distressed debt-focused funds will also hire corporate financiers.

However, cautions David Durham, managing director of Durham Consulting, a sharp downturn in M&A activity may not automatically mean a pick-up in restructuring roles. "Hedge funds are only in play if something is happening. If there is no M&A activity, they are not going to be analyzing deals," he warns.

The last time the M&A bubble burst in 2001, Durham points out that rather than moving into restructuring roles or hedge funds, redundant senior corporate financiers simply set up their own boutiques.