The European middle market investment banking sector remains highly competitive in 2023. Multiple global banks, boutiques and advisors compete for mandates and league table rankings. With market volatility and an uncertain macroeconomic environment, M&A and capital markets activity faces headwinds. However, there remains opportunities across industries and geographies. This article will analyze the leading players in European middle market investment banking league tables, emerging trends, and outlook for 2023.
Bulge bracket banks dominate, boutiques gain share
Large global investment banks continue to lead European middle market league tables by deal volume and value. However, smaller boutiques and regional advisors have steadily gained share over the past decade. Firms such as Lazard, Rothschild and Evercore have built strong franchises, often winning mandates based on sector expertise. Meanwhile, local advisors thrive by leveraging regional relationships and cultural/language understanding.
M&A faces challenges but optimism persists
After a surge in 2021, European middle market M&A volume declined in 2022 amidst higher interest rates, inflation and recession fears. Deal value also decreased across most countries and sectors. However, pent-up demand remains strong, with private equity dry powder at record levels. Many expect deal activity to accelerate in the second half of 2023 as uncertainty subsides.
Equity capital markets hampered by volatility
Volatile equity markets have hampered IPO and secondary issuance activity across Europe’s middle market. However, some optimism exists for a rebound in 2023 as investors search for growth and alternatives to low fixed income yields. Advisors are working with clients to prepare for opportunistic windows to raise capital.
Debt capital markets active but selective
Europe’s middle market leveraged loan and high yield bond markets remain open to high quality issuers. However, lenders and investors have become more selective and demanding on terms as recession concerns mount. Companies with strong business models, cash flows and balance sheets can still access capital to fund M&A and growth.
The European middle market investment banking landscape remains competitive yet fragile in 2023. Leaders must adapt to market conditions while selectively pursuing opportunities. Firms that provide global capabilities alongside regional expertise and relationships are best positioned to gain share.