Goldman Sachs has been the preeminent mergers and acquisitions advisory firm for almost as long as the business has existed in its modern form. Its performance in the difficult environment of 2023 showed how resilient its franchise is, and it once again wins the award for North America’s best bank for advisory.
In its global business, the bank has been able to claim the top spot for advisory revenues for 21 years in succession. In more recent years, it has argued that its maintenance of that position is at least in part down to the One Goldman Sachs strategy that it announced at its January 2020 investor day, and which seeks to coordinate all parts of the franchise in a more client-centric way.
The aim of that is to ensure that the bank’s relationships do not sit merely in one part of the franchise but that, once a client is within the orbit of the firm, it is exposed to as many touchpoints in the overall business as make sense for it.
And while Goldman has expanded – and subsequently trimmed – the scope of its business in recent years, it continues to view its advisory and underwriting groups as the most important first contact with institutional and corporate clients. The bank says that it prioritizes the big and complex transactions that require multiple services, including a cross-border structuring element.
In its advisory business in 2023, Goldman had to manage a substantial industry-wide decline in deal volumes and revenues. Globally, the bank’s advisory revenues fell 30% year on year to $3.3 billion, the biggest percentage fall at the big five US investment banks, but it is a measure of just how far the firm leads the others that it was still the biggest earner on the Street. Its advisory revenues in 2023 were 17% ahead of its closest rival, JPMorgan.
Unsurprisingly, the picture is similar in the bank’s home region. In Dealogic’s volume rankings for advisory deals with any North American involvement, Goldman ranked top with a 42% market share, fully 12 points ahead of JPMorgan’s 31% – an increase on 2022’s 10-point gap even as industry-wide volumes in the region fell by 21%. It also leads comfortably when stripping out non-lead advisory roles from the rankings.
“Our league-table lead has expanded in the last couple of years, as the market drivers have changed,” says Avinash Mehrotra, co-head of Americas M&A at Goldman. “We are now into a corporate-led M&A recovery, with more activity in the old economy sectors of industrials and natural resources after a busy time in technology.”
The firm’s position is even stronger in deals where the acquisition target is in North America. Goldman clocked up a share of 46% of activity in 2023 on this basis, 14 points ahead of JPMorgan and a seven percentage-point increase on its already dominant position in 2022, when volumes were much higher, showing how Goldman’s business is more resilient than rivals when activity drops.
Across both buy and sell sides, Goldman was a lead adviser on 12 of the 20 biggest completed M&A deals involving a North American target in 2023. The biggest of all was its mandate to advise cloud computing company VMWare, which was being sold to Broadcom by Silver Lake Capital in a $98 billion deal that closed in November, having been announced in May 2022.
Goldman Sachs’ performance in the difficult environment of 2023 showed how resilient its franchise is
The bank was also on the second-biggest deal in the period, the $75 billion acquisition of video games company Activision Blizzard by Microsoft, but this time Goldman was the sole adviser to the buyer, working opposite Morgan Stanley and Allen & Co on the sell side.
Other big buy-side mandates included acting as the lead adviser to gas transporter Oneok in its $19 billion acquisition of Magellan Midstream Partners, as well as advising Intercontinental Exchange on its $14.5 billion acquisition of software and data company Black Knight.
Activism remains an accelerant of corporate M&A, Mehrotra notes, while there has been a move to stock deals rather than cash consideration. “And there is a big de-conglomeration theme, with companies separating off divisions and concentrating on core businesses,” he says. “We have been a lead adviser in many of the most important spin-offs and split-offs.”
These included a mandate for consumer health company Kenvue, spun off by Johnson & Johnson in a $42.2 billion deal, and for technology company Veralto, spun off by Danaher Corp for $23.2 billion.
The bank was also a lead adviser to Bank of the West, which was sold by BNP Paribas in a landmark $16.3 billion acquisition by Bank of Montreal.
