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00:00I would say the tone in the boardroom is very much one of enthusiasm and confidence in deploying capital on
00:07M&A transactions and a particular desire to build scale in their core businesses.
00:13So you're right. Year to date we're currently at three point eight trillion dollars in announced M&A volume. Importantly
00:19though it's been very much a strategic driven M&A market.
00:23And that's been pronounced at the upper end of the M&A market. So if you look at the number
00:28of transactions north of 10 billion dollars year to date where the record we're at 49 so far this year.
00:34Now what is driving that I think there's a few factors. So one is and I'm sure we're going to
00:38talk about it as CEO resilience. I think they are more adept at dealing with uncertainty.
00:44The macro backdrop has held up. So that leaves them confidence to lean in and deploying capital. And there's a
00:52sense that they want to exploit their first mover advantage.
00:55So they want to maintain their competitive positioning and get ahead of their peers by doing M&A.
01:00But doesn't that in itself sorry if I can interrupt for a second suggest that there is this period of
01:04upheaval. If they feel the need to get out in front there's AI there's all
01:07these things happening. How much of it is I don't want to say anxiety because clearly they're confident if they're
01:12doing these things. But is it suggestive of a fast
01:16changing landscape. I don't think it's anxiety. I think CEOs and corporates generally have just become much more adept at
01:23dealing with volatility and
01:25near term pressures. So if you take a step back over the last several years they've had a lot of
01:30potential headwinds. So covid and then the ensuing supply chain
01:34disruption globally. Last year we had the evolution of trade policy and the tariffs that followed. And then this year
01:41with the events in the
01:42Middle East we've obviously had rising energy prices which have become somewhat inflationary. So they've been dealing with a lot.
01:49But I think
01:50their true north frankly is focusing on delivering long term shareholder value and executing on their strategic priorities and and
01:58therefore not
01:59necessarily waiting around until they have the perfect set of conditions before they execute a transaction. Well given that and
02:06the fact that
02:07they can weather all these that are frankly existential crises from war to inflation to covid to now a eyes
02:13disruption. Is there anything at this
02:15point that you think could slow down M&A volume. At the moment we're not seeing any slowdown in the
02:21strategic dialogue around their appetite to
02:23deploy capital. You know there are the things that could potentially offset that or the potential headwinds. I would say
02:31any
02:31deterioration in the macro. So for example if we see energy prices remain elevated and that becomes very inflationary that
02:39could be
02:40problematic. To the extent that we see a fundamental shift in in monetary policy. So for example if interest rates
02:47go the wrong way the cost of
02:48capital becomes more expensive. That could be an issue. And obviously geopolitics is always a wild card. You know tough
02:54to predict. But as of
02:56now we're not seeing any slowdown in strategic dialogue around M&A. And I would say you know whatever that
03:03headwind ultimately ends up being
03:05that potentially dampens the M&A market. We're probably not going to be able to predict it right now having
03:10lived through a number of M&A
03:11cycles. Can we talk about the part of this M&A environment that did slow down and is only now
03:16just showing signs of life. And that's
03:18private equity sponsor back to M&A. To what degree are we seeing signs of life. Is the log jam
03:23finally breaking. We're seeing signs of
03:24life but it's gradual. So it's very much as I said a strategic driven M&A market at the moment.
03:31But to give you one statistic so
03:33private equity M&A volumes are up now 10 percent by deal value year over year. They've obviously faced a
03:41number of potential headwinds this year
03:43whether they were long software assets in their portfolios. Private credit. There's been a lot of noise around that. And
03:50obviously
03:50interest rates have not come down quite as materially as the market originally anticipated. But we're starting to see you
03:57know
03:57more confidence amongst our private equity clients. There's more capital floating around potential take privates. And I would say you
04:04know
04:04with one and a half trillion dollars of capital to deploy you know that's got to be put to to
04:09work at some point. And obviously M&A is going to
04:11be a big component of that. One of the factors in this world where there has been so much dry
04:15powder on the private side is that
04:17companies are staying private for longer. And a lot of those want startups that are still private are doing deals.
04:22There was stripe for
04:23example buying open router just this week. Is that an enduring trend. Do you think these private companies being the
04:29ones to execute M&A.
04:30There's no question that you know the private market offers more flexibility to raise capital now than it perhaps did
04:3810 years ago. And
04:39that is allowing corporate such as the one that you mentioned you know to deploy capital on M&A and
04:44do private financings and and put that money
04:47to work. So I think the pressure to access the public markets to raise funds is not the same imperative
04:54that it was. But that said you know
04:56we're currently experiencing a very healthy IPO market at the moment. Does that change at all that that private part
05:02or those private tech
05:03companies change at all the allocations at Goldman. Is that something that you increase for example allocations business wise to
05:10it just that
05:11growing part of the market. No not really. I don't think it fundamentally changes that that that dynamic. But obviously
05:17we're servicing
05:17clients whether they are you know their intent is to remain private for several years or they have ambitions to
05:23go public. What are the parts of the
05:25business that you think you would like to see grow and are growing more within the investment banking universe. Well
05:30obviously we're
05:31we're fortunate enough as we talked about to be in a relatively healthy M&A market at the moment. And
05:36we can talk about the IPO market is
05:38wide open for business. So we're seeing a lot of growth both in the M&A side and in financing
05:43across the board. To call out a couple of
05:45sectors that I see having disproportionate amount of growth obviously AI infrastructure. There's enormous amount of activity around
05:52around that space. I would say we're seeing a great deal of activity. I mentioned at the larger end of
05:57the M&A market but also in the
05:59mid market. Right. You know you think a lot of private capital going into that. So that's an area of
06:03growth for us. And you're seeing other
06:06other mechanisms for private equity taking capital off the table besides just going for an IPO. So for example continuation
06:12vehicles. So I'd point
06:14all three of those as real meaningful areas of growth at the moment. If we can talk more about the
06:19IPO market obviously SpaceX was huge for
06:22Goldman as a whole. We still have some blockbuster IPOs coming up anthropic open AI. So the big ones clearly
06:28will open AI maybe not at least this
06:30year. The big ones are clearly coming to market. But when you look at the IPO environment in its entirety.
06:35How healthy is it or how
06:37dominated is it by the mega deals. Yeah. The IPO market is open for business. So let's start there. And
06:43I would say the issuance has been fairly broad based
06:45year to date. There's no question that you know the AI tailwind has had a pronounced effect on the IPO
06:52market. You mentioned SpaceX. But when you look at AI
06:55related IPOs it roughly represents around 20 percent of the number of companies that have gone public year to date.
07:02But over 50 percent of the
07:03amount of capital that's been raised. Now obviously that latter number is somewhat skewed by the SpaceX IPO. But what
07:09I would say is when you look at the
07:10non AI related IPOs they're up 30 percent year over year. So we've seen real growth in that business. And
07:17it's been fairly broad based. So companies in the
07:19biotech space have been going public in aerospace and defense and industrials. We've seen IPOs and natural resources. So you
07:27know when the
07:27investment thesis is there and the company fits the bill of having the right financial profile then investors are stepping
07:34up to the
07:34plate. And as we look forward we feel you know relatively confident around our pipeline for IPOs for the rest
07:40of the year. Obviously it's going to be
07:41subject to market conditions. I was going to say this market has been pretty choppy. How often are you talking
07:46with clients
07:46saying the conditions are good to IPO. The market though is experiencing a lot of volatility. Maybe wait this out
07:52a few weeks. Is that a
07:53common conversation. Absolutely. And it's a real time conversation that we have with any client that is thinking about going
07:58public. And
07:59obviously issuance is going to be subject to whatever the market conditions are at that point in time. And it
08:05may well be that some of our pipeline
08:07depending on how the markets evolve for the rest of the year slips into 2027. But I think the important
08:13point really is that the
08:14direction of travel is a positive one. And there's no question that the IPO market I think has continued to
08:20see incremental growth
08:21versus last year. So some potential headwinds maybe volatility. Geopolitics you mentioned are always one. We're also in a midterm
08:28year.
08:28That's coming up quickly upon us. What are conversations with clients like ahead of midterms. Are people trying to get
08:33in front of
08:33them. Get M&A done before things come less uncertain. Is it is it not registering. Yeah. How is that
08:38factoring in. Our corporate
08:39clients are much more focused on delivering long term shareholder value. And if an acquisition is really a strategic priority.
08:47They're not going to be trying to gain that around the timing of the elections. They're focused on investing for
08:52the long term. So the
08:55fundamentals that they're really driving their decisions are really around attractiveness of the candidate. The macro backdrop. What does their
09:02funding cost look like.
09:03And how confident confident are they feeling in their in their business performance. Those are really the drivers around
09:09deciding to deploy capital. Now obviously if we get through the midterms. And there's a sea change in sentiment. Right.
09:16That weighs on CEO
09:17confidence. Then clearly that could have a dampening effect. But the dialogue we're having with clients at the moment is
09:22not really
09:23focusing on them. Yeah. I just want to be clear to anyone watching. Attractiveness of the candidate of the company
09:28they want to take over. Not the
09:30politician. Exactly. I'm not making any political judgment on either party. Just trying to save you Matt. Just trying to
09:35make that abundantly
09:36clear. Of course. We are though seeing. So the regulatory environment has been somewhat friendly. But a strange thing has
09:41happened where the
09:42states are getting a lot more involved. We've seen this in the Paramount deal too. How often is that a
09:46conversation with clients of now you need to think not just about federal
09:49regulators but how states will pursue these. Yeah. It's a great question. And I do think. And this isn't unique
09:56to this particular period in time. But the sort of
09:59regulatory overlay on M&A particularly around more consequential transactions. It's super important to be doing your work up front.
10:08And not just at the federal but the state level to make sure that you've thought through all of the
10:11potential angles.
10:12Because obviously that can have real implications for for the probability of closing a transaction. I would love to just
10:19end it with Goldman achieving very early on
10:22this year this milestone of one trillion dollars in deal making advisory. What's next. What's needed to just continue to
10:28sustain that momentum. We're going to continue
10:30investing for the long term in our clients. Server clients be there every day. Take nothing for granted. And win
10:36as a team.
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