Goldman Sachs is no Longer the Top Dog in M&A Advising

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Silverman Sachs doesn’t have the same ring.

For the first time in half a decade, the mega-investment bank lost its title as the world’s go-to advisor for mergers and acquisition deals, ceding the top spot through the first half of the year to the unyielding JPMorgan Chase, according to data compiled by Bloomberg. But if JPMorgan CEO Jamie Dimon is popping champagne, it better be the cheap stuff: excluding the early covid era, 2023 so far marks the worst year for M&A in years.

Let’s Make a (Small) Deal

So just how weightless is JPMorgan’s new crown? Global M&A deals have notched roughly $1.3 trillion in value year-to-date, according to data firm Refinitiv, a 38% plummet over the same period last year. In Europe and the US, it’s even worse, with each region seeing a 50% and 41% downturn, respectively. Curiously, however, deal volume hasn’t quite seen an equivalent dip. In the US, the number of deals has decreased just 5% so far this year compared to last year’s blockbuster frenzy.

“We have seen a structural shift in the type of M&A deals that get announced,” Valeriya Vitkova, senior lecturer at City University of London’s Bayes Business School, told Bloomberg. That’s left big banks to fight over the scraps of advisory fees — and fret about costs following a hiring spree amid the pandemic-era dealmaking bonanza:

  • JPMorgan has advised on deals cumulatively worth $284 billion so far this year, or a nearly 23% market share, according to Bloomberg. Goldman, meanwhile, has advised on transactions worth $237 billion, or around a 19% market share — its first runner-up finish since the first half of 2018.
  • The dearth of deals has pummeled both banks, with Goldman poised to slash 125 managing directors across various departments in its third layoff round in a year, sources told Bloomberg earlier this week, while over at Chase, Bloomberg also reported that the bank is set to lay off around 40 investment bankers.

Times have been even tougher for banks outside the top two. Morgan Stanley announced some 3,000 layoffs a month ago. UBS, meanwhile, plans to cut 20,000 positions at Credit Suisse amid the takeover of its former local rival.

Antitrust Alphabet Soup: The slow drip of big deals may soon get even slower. The US antitrust divisions within the FTC and the DOJ are set to revamp the filing process for M&A deals valued over $111.4 million. It’s the first overhaul in 45 years and would require firms to disclose far more details and data than before. The added paperwork would turn a typical 7-to-10-day merger-approval process into a two-or-three-month march, one antitrust law expert told Bloomberg. As if the legal teams at Microsoft and Activision attempting to complete the largest M&A deal in tech industry history didn’t have enough to sweat about.