Dallas investment banker: Bull market on ‘last wobbly legs’

Jon Prior covers finance for the Dallas Business Journal.

One prominent Dallas investment banker is telling clients to plan for a possible slowdown in the U.S. economy.

“I think there’s a greater than 50-50 chance of a recession next year,” Allegiance Capital Chairman David Mahmood said in an interview Monday. “This bull market is on its last wobbly legs.”

Mahmood and his firm helps clients sell their small to mid-market sized businesses with $5 million in revenue per year or more. His advice: bring in an equity partner “and take some of your chips off the table.” Business owners who have done well and are thinking of soon selling off their life’s work will likely find few buyers and lower prices if the U.S. economy slips. Cashing at least part of the business out now, he said, might be worth it.

The trouble to the U.S. economy is likely to come from issues abroad. Europe’s economies are sluggish – at least one of Mahmood’s clients in Italy is looking for buyers in the U.S. because of the slip in the Euro. Once up-and-coming economies like Brazil are sliding back into decay. And China’s attempts at covering up its rising debt levels and deflating markets are not going well.

There have been brighter signs stateside and in Dallas market in particular. About 255,000 jobs were added in the U.S. last month for instance and consumer spending has increased in recent months, but there have been jitters in some economic data and GDP forecasts that have some whispering about a possible recession.

The U.S. Federal Reserve is worried about trouble abroad and is expected to keep interest rates near their historic lows for longer than they expected at the end of last year.

Anyone who thinks the U.S. is strong enough to weather trouble outside its borders given the complexities of a global economy are “kidding themselves,” Mahmood said.