Citigroup: US Corporates Eye Overseas Deals Amid Strong Dollar, Regulatory Easing
Amid a robust US dollar, favorable regulatory landscape, and valuation disparities, US corporations are actively pursuing overseas acquisitions, according to Citigroup Inc.'s top investment banker, Vis Raghavan.
The high估值倍数at which US companies trade has intensified pressure on boardrooms, as shareholders demand growth to justify valuations that anticipate exceptional future earnings. European stock markets have underperformed the US, presenting enticing targets for American companies.
"We have gems of companies – sometimes we refer to them as good houses in bad neighborhoods – dollar earners trapped in jurisdictions with impaired valuations," Raghavan said. "US companies and private equity firms are eyeing these opportunities."
Merger and acquisition (M&A) activity rebounded in 2024, fueled by access to affordable financing and suppressed demand from previous years. Many dealmakers anticipate President Donald Trump's return to the White House will further stimulate the recovery.
However, Raghavan cautions that geopolitical factors, such as protectionist measures in response to US tariffs, could hinder deal-making. European politicians may seek to protect their "national champions."
The Trump administration's actions will significantly influence M&A activity, as markets navigate mixed signals from the new government. JPMorgan Chase & Co. has created a dedicated team to monitor political developments affecting clients.
"Most banks have groups dedicated to interpreting every aspect of what was said and unsaid, and the direction of travel," Raghavan said. "Citi is at the forefront of internal analysis and advising clients on expectations."
Despite the absence of a global head of M&A at Citigroup, the bank ranked fourth in M&A advisory services in 2024, participating in some of the year's largest deals.
"We have considerable talent internally, and I'm taking time to assess our momentum before making any decisions about that role," Raghavan said. "We're open to all options, but I want to evaluate our current capabilities."