How Much of The Global M&A Industry Did The Largest U.S. Investment Banks Capture In Q4?
Global M&A activity surged over the last quarter of the year, as several mega-deals – including the AT&T-Time Warner merger, Qualcomm’s acquisition of NXP Semiconductors and the GE-Baker Hughes agreement – took the total size of global M&A deals announced for the quarter to almost $1.3 trillion from under $750 billion in the previous quarter. [1] Although this is below the $1.5 trillion in M&A deals announced in Q4 2015, the notable improvement from an average figure of $800 billion for the first three quarters of the year marks a reversal in fortunes for the industry hurt by uncertain economic conditions for a bulk of the year.
The five largest U.S. investment banks made the most of this to report a sizable improvement in their market share of M&A deals announced.
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The fourth quarter was also a strong period in terms of completed M&A deals, as the industry witnessed deals worth $936 billion being completed – up from $808 billion in Q3. The largest deals generally take several months (and in some cases several quarters) to finalize due to their complexity, so the increased volume of closed deals in Q4 is primarily due to the strong pipeline of M&A deals that has accumulated since early 2015.
It should be noted that the largest M&A deals employ multiple investment banks, so the market share figures in either table are not exclusive – explaining why total market share for these 5 banks in terms of deals completed is well above 100%.
While Goldman took top honors in terms of deals announced for Q4 2016, Morgan Stanley emerged at the top in terms of deals completed. Notably, Goldman has held the #1 rank for M&A deals completed worldwide in 14 of the last 20 quarters. Its lower market share in Q4 compared to Morgan Stanley was primarily because of the latter’s sole role in LinkedIn’s acquisition by Microsoft – a deal worth $24.6 billion which closed last December.
You can see how changes in Goldman’s share of the global M&A industry impact our price estimate for the bank’s shares by modifying the chart below.
See the links below for more information and analysis about the 5 largest U.S. investment banks:
- How Much In M&A Advisory Fees Did The 5 Largest U.S. Investment Banks Generate In 2015?
- How Much In Equity Underwriting Fees Did The 5 Largest U.S. Investment Banks Generate In 2015?
- How Much In Debt Origination Fees Did The 5 Largest U.S. Investment Banks Generate In 2015?
Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment / ask questions on the comments section
– /2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, -please refer to the full Trefis analysis for Goldman Sachs | JPMorgan | Morgan Stanley | Bank of America | Citigroup
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- Investment Banking League Tables, Thomson Reuters Deals Intelligence [↩]