In the 2023 global investment banks' competition for mergers and acquisitions (M&A) transaction consulting, Goldman Sachs was temporarily surpassed by a smaller firm in the middle of the year but rallied in the second half to ultimately maintain its dominant performance, achieving a "seven-year winning streak."
Data show that this year, Goldman Sachs provided consulting services for a total of 235 announced mergers and acquisitions, corresponding to a value of over 671 billion U.S. dollars. It is noteworthy that this year also marks the most depressed M&A transactions in the past decade, with the total amount of completed and pending mergers and acquisitions worldwide reaching only 2.16 trillion U.S. dollars, a significant drop from the 2021 record of 3.8 trillion U.S. dollars.
The list also indicates that the M&A downturn is impacting the investment banking industry. The top five banks on the M&A deal list remained largely unchanged this year, with only minor shifts among them.
Outside the domain of global brokerages, some boutique investment banks have continued their rapid ascent by expanding against the trend. Centerview and Evercore both doubled their market share in 2024, surpassing international banking giants like Barclays and UBS.
Observation 1: Energy Giants Bolster Goldman Sachs' Lead
It's worth noting that Goldman Sachs, which was briefly overtaken by JPMorgan Chase in the middle of the year, made a strong comeback to surpass it by $78 billion in the final year-end tally.
This turnaround is attributed to two massive energy sector mergers and acquisitions in the fourth quarter of this year: ExxonMobil's $68 billion acquisition of Pioneer Natural Resources and Chevron's $59 billion acquisition of Hess Corporation, both advised by Goldman Sachs.
Stephan Felgoise, co-head of M&A deals at Goldman Sachs, dismissed rumors of the M&A market's decline as "grossly exaggerated." He noted that while the natural resources business has fallen out of favor over the past five years, Goldman Sachs has heavily invested in alternative energy and the energy transition while maintaining its traditional stronghold.
Mark Sorrell, another Goldman Sachs co-head of M&A deals, attributed the firm's seventh consecutive No. 1 ranking in M&A to its ubiquitous team presence across every sector and region.
Observation 2: The Rise of Boutique Investment Banks
Compared to the reputation of large banks like Goldman Sachs and JP Morgan Chase, boutique investment banks such as Centerview Partners and Evercore, which were once more frequently at the forefront of the "Wall Street's best institutions list," have successfully expanded against the M&A downturn. They have become a dynamic force reshaping the global investment banking landscape.
Evercore, a publicly traded company, saw its stock reach an all-time high this week, with a nearly 60 percent increase for the year.
John Weinberg, Evercore's chief executive, stated that the company recruits talent during downturns and prepares for an uptick in the market. Weinberg made it clear that Evercore aims to compete with the top investment banks and is doing so by recruiting high-quality talent.
Observation 3: Anticipating a Market Rebound by 2024
After experiencing a shift from a boom to a downturn in the investment banking business over the past few years, 2023 has been marked by negative news, such as layoffs at major Wall Street banks.
For the upcoming year 2024, major banks are generally expecting a broader rebound in M&A deals and are beginning to plan accordingly.
Ihsan Essaid and Gary Posternack, co-heads of M&A deals at Barclays, released a statement saying the bank has hired over 20 senior bankers for various sectors and M&A teams. The pair also anticipates increased activity with clients in 2024 as their A-side "ramps up deal volume."
