Stephens Investment Banking 2022: Forward View | Stephens

Who We Are

What We Do

We provide investment banking, research, sales and trading, asset and wealth management, public finance, insurance, private capital, and family office services.

About Us

We are a family-owned financial services firm that values client relationships, long-term stability, and supporting the communities where we live and work.

The Stephens Story

The idea of family defines our culture, because each of us knows that our reputation is on the line as if our own name was on the door.


Our reputation as a leading independent financial services firm is built on the stability of our longstanding and highly experienced senior executives.

Impact Initiatives

We are committed to corporate philanthropy; economic and financial literacy advocacy; and diversity, equity, and inclusion initiatives.

Our Brand Ambassadors

Stephens is proud to sponsor the PGA TOUR, LPGA Tour, and PGA TOUR Champions careers, as well as applaud the philanthropic endeavors, of our Brand Ambassadors.

Making Connections

We host many highly informative meetings each year with clients, industry decision makers, and thought leaders across the U.S. and in Europe.

Our Businesses

Capital Management

We provide fiduciary investment strategies to public-and private-sector institutional clients through asset allocation, consulting, and retirement services.

Fixed Income Sales & Trading

Decades of proven performance and experience in providing tailored fixed income trading and underwriting services to major municipal and corporate issuers.

Institutional Equities and Research

Proven industry-leading research, global market insights, and client-focused execution.


Customized risk management, property & casualty, executive strategies and employee benefits solutions that protect our clients over the long term.

Investment Banking

We assist companies with accessing capital through innovative advisory and execution services that help firms achieve their strategic goals.

Private Capital

We have been a trusted and reliable source of capital for private companies for over 70 years.

Private Wealth Management

Our experienced Private Client Group professionals develop customized investment strategies to help clients achieve their financial goals.

Public Finance

We are a trusted municipal advisor with proven expertise in public financings. We also work with clients in negotiated and competitive municipal underwritings.

Market Trends

Stephens Investment Banking 2022: Forward View

Feb 16, 2022

We had a very active year advising clients on a wide range of transactions in 2021, and this year is already shaping up to be just as energetic for us. Last year Stephens Investment Banking closed nearly 200 transactions globally with a total value of nearly $33 billion. Over half of those transactions were mergers and acquisitions, and 15 were cross-border transactions involving our U.S. and European bankers. Here, several of our senior bankers discuss the most important factors for companies to consider as they evaluate their capital markets and M&A needs. We touch on the major themes of the year – from COVID-19 and supply chain disruptions to inflation and the potential for rising interest rates – as well as what may be on the horizon in 2022.
Brad Eichler
Executive Vice President, Head of Investment Banking

What is your view on where Equity Capital Markets are going in 2022?

SCOTT: We had a very active year for IPOs in 2021, but the interest rate environment is going to dictate the pace of activity throughout 2022 based on how far and how fast the Federal Reserve will move. Since mid-November, major pullbacks in the Russell 2000 and the NASDAQ have transpired on rate concerns. Nearly two-thirds of 2021 IPOs have traded below market. And close to 600 DeSPAC processes have yet to occur. With 2021 being the fourth consecutive year of increased issuance for U.S. IPOs, it would be surprising for 2022 to maintain that trend. Still, as of January we had over 100 companies in backlog for U.S. IPO registration, and there is significant pent up demand for venture backed or sponsored backed companies to use the IPO market as an exit strategy.

How are inflation and interest rates affecting what you’re seeing in Debt Capital Markets?

DAVIDSON: The past two years were unprecedented, with approximately $465 billion of high-yield issuances in 2021, outperforming 2020. This year, high-yield issuances are predicted to be slightly down at $400 billion to $430 billion. Inflation is a huge factor. CPI was up almost 7% year-on-year in December and M2 money supply reached $21 trillion, $6 trillion above its level two years before. At least three Fed rate hikes are likely this year. So we expect pockets of
volatility in the high-yield market through the year. This could temporarily slow M&A activity, as buyers negotiate for wider flex language within financing
commitments. In private credit, the level of capital has reached unprecedented amounts. The volume of high quality investment opportunities has remained the same or declined slightly. This supply-demand imbalance is likely to keep private credit yields unchanged for the year at or around Libor + 550. However, for the most pristine opportunities, we expect pricing to break through the Libor + 500 floor.

How are the challenges of the day impacting U.S.-based Capital Solutions strategies?

SACHIN: Continued economic tailwinds, the availability of capital, and record-low default rates all suggest little immediate risk of a recession or credit crunch. The fast and intense 2020-to-2021 restructuring cycle focused on COVID-impacted sectors such as energy, retail, travel, entertainment, and hospitality. But that cycle was relatively short due to immense fiscal and monetary support, and lenient creditors. As the Fed starts tightening policy, struggles may arise for companies unable to fix COVID-related problems, adjust to supply chain disruptions, or pass on inflationary pressures. In these cases, default rates may rise later in 2022. Now would be the time for them to address liability management through credit agreement amendments, maturity extensions, exchange offers, or refinancings. High-growth companies burning cash may benefit from structured debt or equity transactions.

What do you expect for European private debt, and potential headwinds for companies?

SHAUN: Europe and the UK in particular saw very strong debt markets in 2021, through greater opportunity for refinancing and improved leverage opportunities, as well as competitive M&A markets bolstered by acquirers with significant dry powder. In 2022, direct lending will likely continue to dominate the European mid-market with banks more likely to be supportive through revolvers than through issuance of Term Loan B facilities. In recent months, ESG-linked lending has gained momentum, with credit funds offering margin ratchets. Annual audits can benefit issuers with ESG credentials by producing a small
but meaningful benefit in spread. As issuers come to maturity, those lacking ESG credentials may face greater refinancing challenges. With government stimulus receding and inflation building, we would expect increased restructuring activity in Europe later this year.

M&A was incredibly vibrant last year. How is 2022 looking so far?

MARSHALL: With more than $5 trillion of acquisition value, 2021 was a record year for M&A globally. There was significant increase in volume for deals of all sizes. Indeed, Stephens also had a record year for M&A and we anticipate a busy 2022. Buyers are focusing on how inflation, supply chain disruptions, and labor shortages may affect the normalized earnings power of targets. Public companies continue to be highly active selective acquirers of businesses that can supplement their organic growth and support their core competencies, while divesting noncore and low-return businesses. Many private companies face intense generational shifts in ownership as they search for sponsorship partners. In addition, the pace of transatlantic deals is poised to accelerate in 2022
as buyers and sellers seek synergies that help them improve margins, market share, and capabilities.

Stephens has firsthand experience with family businesses. What are their concerns in 2022?

MICKEY: We see exciting developments with both family businesses – where a family is still involved in operating and growing that asset by investing much of their net worth – as well as with family offices, where a family might have exited a legacy business and now has a pool of capital to deploy, manage, and protect. Family businesses in 2022 are attempting to navigate myriad macroeconomic pressures, for instance by onshoring production instead of outsourcing it abroad. Some families may need to be more innovative about accessing capital for organic and inorganic growth initiatives. Family offices are increasingly
focused on standing apart from private equity firms as the long-term capital provider to family businesses. Family offices are doing this by applying flexibility in the capital structure; acting as either a majority, minority, or structured equity partner; and offering a supportive organizational culture. We anticipate a ramp up of family business-family office partnerships this year.

Are U.S.-based financial sponsors still seeking to unload significant amounts of dry powder built up earlier in the pandemic?

BRIAN: The U.S. private equity market hit record activity in 2021, with over $1 trillion in total deal value and 8,500 in total deal volume. This exceeded the 2019 record by over 50%. Surprisingly, over 70% of capital that sponsors deployed in the U.S. last year went to add-on acquisitions for portfolio companies. Usually there is more of a blend between add-ons and platform investments. Exit activity was spread out across M&A sell-side, IPOs for sponsor backed companies, and SPACs. The fundraising environment also was quite energetic, with mega funds raising record amounts of capital. These PE trends are
largely on track to persist in 2022, albeit likely at a slightly moderated pace.

What is the European view on sponsor activity, and how does it compare with the U.S. view?

SIMON: Similar to the U.S., the European PE market had record capital deployment characterized by a recovery in confidence from 2020. Last year Europe had over 7,000 new deals – compared with 4,000 to 5,000 deals in the last two years – as total deal value skyrocketed to over €750 billion. The middle market drove much of this activity. A seller’s market dominated, with buyers competing aggressively for assets. Pricing remained robust, and the median EV-toEBITDA multiple was approximately 12.5x. Like in the U.S., add-on deals and continuation funds were popular. Transatlantic sponsor-to-sponsor activity, from the U.S. to Europe and vice versa, picked up considerably. European sponsors also have been reinvesting as minority holders in successful businesses they recently sold. Huge amounts of unspent capital and highly liquid credit markets suggest 2022 will be another strong year.

About the Experts

J. Bradford Eichler

Chief Operating Officer, Corporate

Read full bio

Scott Studwell

Managing Director, Head of U.S. Depositories and Co-Head of Equity Capital Markets, Investment Banking

Read full bio

A. Davidson Hall

Managing Director, Co-Head of Debt Capital Markets, Investment Banking

Read full bio

Sachin Lulla

Managing Director, Head of the Capital Solutions Group, Investment Banking

Read full bio

Shaun Holmes

Managing Director & Head of UK, Investment Banking

Read full bio

Marshall McKissack

Managing Director, Head of M&A Advisory, Investment Banking

Read full bio

Mickey McFarlin

Managing Director, Head of Private Capital Markets, Family Offices, Investment Banking

Read full bio

Simon Tilley

Managing Director, Investment Banking

Read full bio
  1. This material was prepared for informative purposes only and is not a solicitation, recommendation or offer to buy or sell any securities. It does not purport to be a complete description of the securities, markets or developments referred to in the material or to include all information needed to evaluate any transaction. Information contained in the material was derived from sources considered reliable, but has not been independently confirmed or verified. No subsequent publication or distribution of this material shall mean or imply that any such information or opinion remains current at any time after the stated date of the material. We do not undertake to advise you of any changes in any such information or opinion. Any opinions expressed in the material are the personal opinions of the applicable author(s). These opinions do not necessarily reflect the opinions of any other person or entity, and they are subject to change without notice. Stephens or its employees, officers, directors or affiliates may provide services from time to time to any of the companies mentioned and may have a long or short position in any of the securities mentioned and may sell or buy such securities. Any expressions of opinion or other forward looking statements included in this document are based on information available on such date of issuance and speak only as of such date. No assurance can be given that any of such opinions or statements will prove correct. Data referenced in this document is derived from Statistica, S&P Capital IQ, PwC, Private Debt Investor, the Federal Reserve, the U.S. Bureau of Labor Statistics, and other data sources cited (collectively “Data Providers”). Data Providers do not guarantee the accuracy, adequacy, completeness or availability of any content provided and are not responsible for any errors or omissions, regardless of the cause or for the results obtained from the use of such content. In no event shall the Data Providers or Stephens be liable for any damages, costs, expenses, legal fees or losses in connection with any use of the data included in this document.
  2. “Stephens” (the company brand name) is a leading family-owned independent financial services firm. Stephens’ US operations are headquartered in Little Rock, AR, with strategic locations in the US and a European presence in the UK and Germany. Stephens Inc. is a Member of the New York Stock Exchange and the Securities Investor Protection Corporation and is regulated by the United States Securities and Exchange Commission and the Financial Industry Regulatory Authority. Stephens Europe Limited (Registered office: 12 Arthur Street, London, EC4R 9AB, Registered number 8817024) is authorised and regulated by the Financial Conduct Authority. For more information, visit © 2022 Stephens