The volume of completed M&A deals involving a North American buyer or target was steeply down in the awards period this year, with a 41% drop to just under $2 trillion. But in volatile times activity concentrates on the very best franchises, and this year demonstrated that well. For increasing its market share and strengthening its already dominant position, Goldman Sachs is North America’s best bank for advisory.
Goldman worked on completed deals worth a total of $810 billion in the latest awards period, well ahead of second- and third-placed JPMorgan and Morgan Stanley. Its global advisory revenues for the four quarters of the period were $4.4 billion, 46% ahead of its closest competitor, JPMorgan.
In announced deals during the period, Goldman was also the leader by a slightly smaller margin. And if volumes start to pick up as valuations stabilize and clients adapt, the firm will be even better placed. According to Brian Haufrect, co-head of Americas M&A at Goldman Sachs, conditions are beginning to improve after a tough period for deals.
“We have been operating in a more challenging deal-making environment driven by macro uncertainty, market volatility and significant increases in financing costs,” he says. “This clearly pressured volumes in the second half of 2022 and carried over into the start of 2023.
“That said, the financing markets have improved, the markets have adjusted to the new environment and clients have remained focused on their most important strategic priorities.”
Goldman was on 35 of the 50 biggest deals and eight of the top 10. The bank’s biggest deal, the $79 billion sale of WarnerMedia by AT&T to Discovery, where it was advising Warner, was completed at the very start of the awards period, having been announced nearly a year earlier, when conditions looked very different.
The bank was also involved in the $41.3 billion takeover of Twitter by Elon Musk, which closed in October 2022 and where Goldman was one of the advisers to Twitter.
One theme of the year, reflecting the drive by companies to search for innovative ways to realize value at difficult times, was the simplification of businesses – carving out units either to be sold to private buyers or spun off onto public markets.
Portfolio simplification remains one of the most important themes in M&A
Avinash Mehrotra
The AT&T sale of WarnerMedia obviously falls into that category, but also among Goldman’s biggest deals was the $30.4 billion spin-off by General Electric of GE Healthcare Technologies, where Goldman was one of the advisers to the spun-off entity. Another notable example was BNP Paribas’ $16.3 billion sale of Bank of the West to Bank of Montreal, a deal that closed in February 2023.
“Portfolio simplification remains one of the most important themes in M&A,” says Avinash Mehrotra, co-head of Americas M&A. “Management teams and boards continue to evaluate how they are best able to compete and drive value over time. This often includes organic growth and M&A, but it often includes the separation of elements of the portfolio.”
This is a trend that may continue for some time – especially as companies remain under pressure in difficult economic conditions.
“Spin-offs, spin-mergers and other structured M&A are a key tool in the tool kit and will likely drive many of the largest transactions in the market,” says Mehrotra.
