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Goldman Sachs Slips from M&A throne

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2023-06-30

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Goldman Sachs Group has experienced a significant shift in its ranking as the leading mergers and acquisitions adviser globally. For the first time in five years, Goldman Sachs has lost its top position to JPMorgan Chase & Co. According to Bloomberg data, JPMorgan now holds the coveted No. 1 spot, boasting a 22.5% market share with credits on $284 billion worth of deals. Meanwhile, Goldman Sachs has slipped to second place, securing an 18.8% market share with its involvement in $237 billion worth of transactions.

This change in rankings comes amidst a challenging period for the M&A landscape, with global deal volumes plummeting by 42% this year to $1.3 trillion. The decline has resulted in diminished fees and has prompted major job cuts across Wall Street. In line with the industry trend, Goldman Sachs recently announced the elimination of 125 managing director positions as part of cost-saving measures. This marks the bank's third round of job cuts within a year.

Valeriya Vitkova, a senior lecturer at City University of London's Bayes Business School, points to the reduced number of megadeals as a contributing factor to the shifts in league table rankings. She highlights a structural shift in the types of M&A deals being announced and ponders whether this decline will persist or if it is merely a temporary shift.

Although league table rankings may hold less significance in a year with declining deal volumes, Goldman Sachs has a track record of reclaiming the top spot. In 2018, despite trailing behind Morgan Stanley at mid-year, Goldman Sachs emerged victorious by year-end. Bloomberg data reveals that there have been only three instances in the past two decades when Goldman Sachs did not secure the No. 1 ranking globally for a full year.

Representatives for both Goldman Sachs and JPMorgan declined to comment on the change in rankings. Other banks, such as Guggenheim and Centerview Partners, have also witnessed notable fluctuations in their rankings. Guggenheim, which ranked 57th in 2022, has soared to 9th place thanks to its involvement in advising Pfizer on the $43 billion acquisition of cancer drugmaker Seagen. Centerview Partners, on the other hand, experienced a nine-spot jump due to its advisory role in the Seagen deal.

The league table ranking serves as an indicator of a bank's engagement in the M&A advisory business, which directly affects revenues and profits. As a result, senior executives are likely to closely monitor these rankings. The Australian investment bank of Credit Suisse has also seen its fortunes decline, with its senior banker count dwindling as global layoffs commence.

Despite the current landscape, Goldman Sachs remains optimistic about its prospects and the potential to reclaim the top M&A advisory ranking by the end of the year. The ultimate outcome will be determined by market dynamics and the resurgence of deal activity in the coming months.

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