It's the best of times and the worst of times to be an M&A banker
M&A deals are back. Goldman Sachs is predicting a "surge" in M&A this year as businesses seek to reposition themselves for the AI world, despite geopolitical uncertainty. "CEOs are confident," declared Goldman Sachs' president John Waldron last week. They are also "uncertain and worried." It's a "winner-take-most-environment," said Waldron. CEOs need to merge with other corporates simply to survive.
💥Follow us on WhatsApp for news alerts.💥
While this sounds good for M&A bankers, the reality is not so simple. As the Bernstein analyst interviewing Waldron observed, the "winner-takes-most environment" for corporates applies equally to banks themselves. Goldman Sachs currently has a $300bn lead in the M&A league table, said Waldron. This is the firm's largest ever lead at this point in the year, Waldron added.
This is why, while some Goldman Sachs bankers and their teams are working hard on live deals, boutique bank Perella Weinberg is simultaneously cutting 10% of its headcount and talking about the "fog of war." Deals in the current market are not distributed equally.
Based on data from Dealogic, the charts below explain why. While the value of M&A deals in most key sectors is up so far this year, the number of closed M&A deals is not. As a result, the average M&A deal size in most sectors has risen considerably. If you're working on one of these big deals, well done. If you're not, bad luck.
Among those in the doldrums are the financial sponsors bankers credited with being the industry's most talented schmoozers. Waldron noted last week that corporate M&A is up 63% year-on-year while financial sponsor M&A involving private equity firms is down 4%. As ever, though, Waldron also noted that financial sponsor firms are sitting on $1 trillion of dry powder. When and if they spend it, it will be a tremendous time for everyone everywhere.
Follow me on X. Follow me on LinkedIn.
Have a confidential story, tip, or comment you’d like to share? Contact: +44 7537 182250 (SMS, Whatsapp or voicemail). Telegram: @SarahButcher. Signal: sarahbutcher.22 Click here to fill in our anonymous form, or email editortips@efinancialcareers.com.
Bear with us if you leave a comment at the bottom of this article: comments are moderated intermittently by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. You must take sole responsibility for comments you post on this site. We will take reasonable steps to weed out anything that we consider to be offensive or inappropriate.
