Goldman Sachs beats JP Morgan to emerge best provider for merger advice

Goldman Sachs Group Inc. fended off determined rivals in the most challenging year for dealmaking of the past decade — emerging as the No. 1 provider of merger advice for the seventh year running.

 

The bank ended up with a 31% share of the global take for merger advice, edging past JPMorgan Chase & Co., which was in the lead at the year’s midpoint, according to data compiled by Bloomberg.

In all, Goldman Sachs advised on 235 mergers and acquisitions announced during the year with a combined value of more than $671 billion. That’s out of $2.16 trillion globally in pending and completed transactions, down from 2021’s record of $3.8 trillion, the data show.

“We’ve really pulled it together,” Mark Sorrell, global co-head of mergers and acquisitions for Goldman Sachs, said of the bank’s performance in the industry league tables. “And why? It’s the team on the field, kind of everywhere, every sector, every region.”

While Goldman Sachs’s lead over JPMorgan narrowed from last year, its market share since 2016 has widened overall against its largest rivals. In 2017 — the first year of its winning streak — the bank had a 27% market share in a year with relatively high deal volume.

The bank and its rivals are preparing for a rebound in 2024. While a deals drop-off during the past year led to tens of thousands of job cuts across the world’s biggest banks, some corners of the industry have built market share and have been hiring to capitalize on the hoped-for deals resurgence.

A few boutique investment banks gained ground, the data show. Centerview Partners and Evercore Inc. each more than doubled their market share, bypassing larger banks including Barclays Plc and UBS Group AG. Centerview jumped from 16th place to sixth with a market share of almost 12%, while Evercore moved up to seventh from 14th on the league tables for 2022.

Evercore’s Strategy

 

“We’re adding more capacity to serve clients which we think will help our growth,” said Evercore Chief Executive Officer John Weinberg, citing hiring and promotions. “We’re adding talent in a down market and are positioning ourselves for when the market does turn.”

Evercore, one of the largest of the publicly traded independent investment banks, saw its revenue tied to merger advice place fourth among global investment banks for the first nine months of the year, behind only Goldman Sachs, JPMorgan and Morgan Stanley. The banks are slated to post full year results in early 2024.

“Are we trying to be competitive with the top group? We absolutely are,” Weinberg said in an interview. “And we’re trying to do it by having high quality people.”

While merger totals were muted through most of 2023, volumes in the final three months of the year increased by more than $160 billion from the previous quarter. That included the two biggest acquisitions announced in 2023 — Exxon Mobil Corp.’s $68 billion deal for Pioneer Natural Resources Co. and Chevron Corp.’s $59 billion takeover of Hess Corp. Goldman Sachs is an adviser on both transactions, lifting the total volume of its deals to $78 billion more than those of JPMorgan, the data show. 

Goldman’s Franchise

 

“The rumors of the demise of the M&A market is greatly exaggerated,” Stephan Felgoise, the other M&A co-head for Goldman Sachs, said in an interview. “The natural resources business by every measure for the last five years was out of vogue. We heavily invested in alternative energy and energy transition across the firm, but we maintained our franchise.” 

Bankers are expecting deal growth in a broader range of sectors in 2024. That includes transactions among private equity firms, and some banks are hiring accordingly.

Barclays has made more than 20 senior hires across its industry sector and M&A teams, according to an e-mailed statement by global M&A co-heads Ihsan Essaid and Gary Posternack.

“In 2024, while continuing to help our corporate clients navigate an evolving strategic and economic landscape, we expect to be much more active with financial sponsors as they ramp up transaction flow,” they said.

First Published: Dec 29 2023 | 10:23 PM IST