FORTUNE -- To get a sense of merger and acquisition volume, one can usually look to public equity performance. And vice versa. Just take a look at the correlation since 1995:
Last quarter, however, was a very different story. While the S&P 500 soared by more than 10% between Q4 2012 and Q1 2013, the global M&A market fell by nearly 29%. It was as if the chicken and egg were no longer related.
Rich Jeanneret, Americas vice chair for Ernst & Young transaction advisory services, believes that the disconnect has its roots in the financial crisis.
"It's a confidence paradox," he explains. "People are feeling better about the economic recovery and growth prospects, but are more skittish when it comes to equity valuations and short-term market stability. It's kind of like if you went to the beach last week and there was a shark in the water. You're back today and the lifeguard insists the sharks are gone, but you still may not be trusting enough to do more than dip your toe in the water. The more severe the fright, the more skittish you are."
Jeanneret thinks that M&A might catch back up if the public equities markets remain stable for six or eight months, but also thinks that a bit of public valuation "retrenching" may also help. "A natural pullback may actually help things, just because it would make buyers more comfortable with valuations and reduce those concerns about short-term volatility."
Jeanneret adds that there is plenty of theoretical supply and demand. All it needs now is some common ground on which to meet.
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Tech IPOs will return. Just have some patience.
FORTUNE -- In baseball, people get all excited about how a team begins the year. Win 15 of your first 20, and you're a shoo-in for the World Series. Lose your first few, and someone better get fired. The tech IPO market seems pretty similar.
There is no doubt that 2013 has begun slowly, with just five successful IPOs so far for VC-backed technology MOREDan Primack - Mar 22, 2013 3:46 PM ET
The schizophrenia continues: We aren't going public now, but we will soon.
FORTUNE -- It's probably not a stunning revelation that an increase in IPO filings historically portends an improving economy. Late 2009 saw a strong uptick, for instance, which was followed by a great bull market in 2010, while the stagflation of the mid 1970s meant barely any IPOs saw daylight, especially during the dark days between 1974 and 1976.
So MOREBrendan Coffey, Contributor - Oct 19, 2011 3:23 PM ET
Can an embattled accounting firm turn the New York attorney general's greatest strength against him?
Ernst & Young may try to do just that as it braces against a civil fraud suit claiming it helped conceal Lehman Brothers' accounting games in the years before its 2008 collapse.
Ernst promised in a statement this week to defend itself vigorously in the complaint, which seeks at least $150 million in damages. The firm said it MOREColin Barr - Dec 23, 2010 6:42 AM ET
New York sued the giant accounting firm Ernst & Young Tuesday, saying it helped Lehman Brothers deceive investors about its true health for seven years.
The complaint, filed in state Supreme Court, seeks the repayment of at least $150 million in fees the audit firm collected between 2001, when Lehman's aggressive accounting began, and 2008, when the venerable bank collapsed, precipitating a global bank run.
"Our lawsuit seeks to recover the fees collected by MOREColin Barr - Dec 21, 2010 11:31 AM ET
Don't look for indictments in Andrew Cuomo's case against the accounting firm. That could kill the business, and no one wants that.
If you're going to screw up, make sure you're working at a company that regulators aren't going to allow to fail. That's the lesson not only for big financial companies, but for the Final Four big national accounting firms as well.
Take Ernst & Young, which is a target of MOREAllan Sloan, senior editor-at-large - Dec 21, 2010 11:23 AM ET
"Auditors who can't say no" sounds like a support group in the making. But one embattled audit firm isn't getting a terribly sympathetic hearing.
So says a quickie survey conducted Monday by the Argyle Executive Forum. The electronic poll of 498 members finds that nearly half of respondents -- 48% -- believe New York should move forward on civil fraud charges against Ernst & Young over its role in the MOREColin Barr - Dec 21, 2010 6:26 AM ET
One of the toothless accounting watchdogs that did so much to bring us the financial crisis is about to get an overdue scolding.
New York's attorney general is pursuing a civil suit against Ernst & Young, the Big 4 accounting firm that signed off on Lehman Brothers' financial reports in the years leading up to the investment bank's panic-inducing September 2008 collapse.
The case comes nine months after the bankruptcy examiner in the Lehman MOREColin Barr - Dec 20, 2010 11:47 AM ET
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