The busiest 12 months ever in M&A fit perfectly with the investments Goldman Sachs has been making in its advisory business.
Rivalling the big commercial banks, the US firm has been hiring bankers to cover mid-sized US corporations based in cities across the country. It wasn’t mega deals that drove up volumes in 2021 and at the start of 2022, rather it was sub-$1 billion transactions.
Goldman used to pass on these. Now it chases them eagerly.
Stephan Feldgoise, global co-head of M&A at Goldman, tells Euromoney that the firm’s ambition is no less than 100% market share. It wants to be on every transaction.
“We want our clients to wake up each morning and, whether they are dealing with a major strategic issue or a minor transaction, for their first thought to be: ‘I want to speak to my advisers at Goldman Sachs,’” says Feldgoise.
Goldman has upped its investment in the coverage of the technology and healthcare sectors and led sizeable completed deals and advised on some of the biggest to be announced.
Goldman advised Slack Technologies on its sale to Salesforce competed last year, having previously advised Slack on its direct listing and convertible capital raising. It has also worked for Salesforce on other large-scale M&A transactions.
Big announcements include advising Microsoft this year on its $69 billion agreed deal for Activision Blizzard, the first big metaverse M&A deal.
One of the key deals of the year came in an old economy business – railways. Goldman advised Canadian Pacific on the $31 billion acquisition of Kansas City Southern last December. The largest combination of class-1 railroads in decades should create the first true single-line connection between Mexico, the US and Canada.
We want our clients to wake up each morning and, whether they are dealing with a major strategic issue or a minor transaction, for their first thought to be: ‘I want to speak to my advisers at Goldman Sachs’
Stephan Feldgoise
Canadian Pacific triumphed after the target had accepted its first offer and then paid a break fee to go with a higher rival bid from Canadian National, before getting cold feet over regulatory reviews and coming back to Canadian Pacific.
The M&A business will cool in the months ahead as rates rise and markets sell off, but Feldgoise expects to remain busy.
“The motivation for corporate executives to build scale for diversification remains strong,” he suggests, and the lesson of Covid was that “anything can happen in this world. And so boards have said that when there is a window to do the strategic deals they have long considered, then they should act.”
