Goldman Sachs
The global rise in M&A volumes in the past 12 months can be largely attributed to the re-emergence of a few multi-billion dollar, complex, industry-defining transactions. Goldman Sachs has once again asserted its dominance in this market, advising on seven of the world’s largest M&A deals over this period. These included Bank of America’s $49 billion acquisition of Fleet Boston, Walt Disney’s $67 billion unsolicited offer from Comcast in the US and Aventis’s $69 billion sale to Sanofi-Synthélabo in Europe.
The only other firm that comes close to Goldman in winning these jumbo advisory mandates is Morgan Stanley. The latter has powered up the league tables over the past year and has been aggressively growing its business but it is still a clear second for global announced or completed deals over the 12 months to the end of April 2004.
Goldman has proved its worth in hostile deals such as Walt Disney and Aventis and across a full range of regions and sectors. Gene Sykes, co-head of global M&A at Goldman Sachs, says the bank is delighted to be getting these jumbo mandates but doesn’t believe they are the main driver of the business. “The bigger deals are harder to get done, affect our league table status and take up a tremendous amount of resources but our business is pitched below this. We want our best people working on the smaller transactions as well.”
He describes Goldman’s M&A business as “a highly coordinated global effort so the same standards and approach are brought to bear wherever a deal is happening. Open communication across the business is key to this and we realize the advantage this give us when we sit on the same side of the negotiating table with some other banks.”
Sykes is optimistic that M&A volume will pick up across a broader range of sectors over the coming months. The firm is seeing more activity in healthcare and energy and is optimistic about opportunities in the consumer and industrial sectors. But he is not raising expectations of a boom.
“We think we’ll continue to see a modest recovery but this is a very difficult area to predict. You also have to be careful not to misread the data as the large transactions may be masking what is happening in the broader business,” he says. “We have seen a lot of the big deals clustered around the first quarter of 2004, but the second quarter was more subdued.”
At the moment, league table evidence suggests that Morgan Stanley is closing the gap on Goldman Sachs. As other banks turn their attention to building out their M&A franchises once again, no-one can afford to be complacent.
