Goldman Sachs Played A Role In M&A Deals Worth $319 Billion In Q3
After recovering from weak activity levels in Q1, the global M&A industry shifted into high gear over the third quarter, with investment banks worldwide announcing $837 billion in deals for the period – an improvement from the $820 billion figure for the previous quarter and well above the $748 billion figure a year ago. This figure was boosted by the proposed $30 billion acquisition of Rockwell Collins by United Technologies, and the $19 billion acquisition of Energy Future Holding by Sempra Energy.
With the five largest U.S. investment banks playing lead roles in most of the largest deals announced over the quarter, their market shares were visibly upbeat for the period. Notably, Morgan Stanley and JPMorgan figure at the top of the list as they have key advisory roles in the Rockwell Collins – United Technologies deal along with Citigroup, while Goldman is not a part of the advising team.
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In terms of M&A deals completed, things slowed down a bit in Q3 2017, though, as the industry witnessed deals worth $768 billion being completed in Q3 – down from around $800 billion in Q2 2017 and Q3 2016. We attribute the decline to the weak first quarter. As large deals generally take several months (and in some cases several quarters) to finalize due to their complexity, the reduced pipeline of announced deals would have had a direct impact on the total deal figure for Q3 2017.
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%.
Notably, Goldman was a part of deals worth $319 billion that closed in Q3 – a figure 40% higher than second-ranked Morgan Stanley. In fact, Goldman is the only investment bank that has helped closed M&A deals worth more than $300 billion in a single quarter in the last seven years – and it has now done so on three different occasions (Q3 2015, Q2 2016 and Q3 2017). This was primarily because Goldman played a part in 116 M&A deals over the quarter – many of them in which it was the sole advisor to a company. Because of this, Thomson Reuters estimates that Goldman’s M&A advisory fees for Q3 2017 will be roughly 12% higher than the already strong figure it reported in Q2 2017.
The M&A advisory business has been one of Goldman’s strengths over the years, as the investment bank has held the #1 rank for M&A deals completed worldwide in 16 of the last 25 quarters. You can see how Goldman’s share of the global M&A industry impacts 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:
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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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