US Election Will Increase M&A Volatility, PJT’s Taubman Says

(Bloomberg) -- The likely face-off between President Joe Biden and Donald Trump in November will stir turmoil in the mergers-and-acquisitions market this year, according to PJT Partners’ founder Paul Taubman.

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“This election is going to introduce an extraordinary amount of volatility into the market,” Taubman said on Bloomberg TV Thursday, adding that he expects the vote margin will be razor-thin. “When I talk to clients, they sort of understand it, they are prepared for it, but it’s not really front and center, and I think that’s a wall of worry we will climb.”

Taubman, who founded New York-based advisory firm PJT in 2014 after three decades at Morgan Stanley, said that means many transactions will be put on pause as buyers and sellers monitor the direction of the US when it comes to China, tariffs and protectionism.

A volatile election year may dampen the mood among dealmakers who are hoping for a strong rebound in M&A after last year’s downturn, which was triggered by rising borrowing costs. Signals from central bankers that interest rates are likely to fall this year have boosted confidence that a surge of deals could resume, but political uncertainty across the world may hold back some of them.

For Taubman, it’s private equity that needs to make the first moves. He expects health care, energy and consumer to be the most active sectors.

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Taubman also warned that the rise of artificial intelligence will cause “profound” disruptions in labor markets that aren’t yet fully understood.

“Some of the talk around AI and this idea it would complement jobs — I’m not convinced,” Taubman said. “There is a feeling and fear that AI can do to services what globalization did to manufacturing, just huge job displacement and massive issues for decades.”

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