Goldman Set to Edge Morgan Stanley as 2010 Merger King

Friday, 31 Dec 2010 03:55 PM

 

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The race to the top of the global mergers and acquisitions league table looks set to end with Goldman Sachs retaking the honors from the rival which derailed its nine-year grip on the ranking last year.

Investment banks Goldman and Morgan Stanley have been neck-and-neck in the M&A stakes throughout the year, according to Thomson Reuters data, ahead of rivals JP Morgan, Credit Suisse, Deutsche Bank, UBS, Bank of America and Citigroup.

But with only a few hours before the ranking is officially closed, Goldman looks set to beat last year's top adviser Morgan Stanley, marking a return to form after getting hurt in the financial crisis.

Goldman has advised on 368 deals worth $553.5 billion so far this year, compared with Morgan Stanley's 393 deals worth $537.9 billion. The slim $15.6 billion margin between the two firms — or about half a percent — could still change when the final numbers are counted.

And with the gap so small, slight differences in the methods used to determine which deals to include in the charts could also still mean Morgan Stanley does come up on top in the rankings of rival data providers, such as Dealogic.

In the Thomson Reuters league tables, Goldman was ahead at the end of the first quarter and Morgan Stanley led in the second quarter. The two firms swapped first and second slots in the second half of the year.

TRACK RECORDS

While both firms have suffered because the financial crisis sent M&A volumes tumbling, their strong track records have helped them win more deals and get ahead of rivals.

"These banks have a reputation. Nobody would ever get fired in the boardroom for recommending Goldman or Morgan Stanley," said Scott Moeller, director of the M&A practice at London's Cass Business School.
Goldman was the most active M&A adviser for nine years — a period that included the bottom of the previous cycle after the technology bubble burst — until it was unseated by Morgan Stanley last year.

Goldman's key partners include London-based Karen Cook, who serves as a non-executive director at retailer Tesco, and natural-resources specialist Julian Metherell.

Morgan Stanley's star names include Simon Robey, who has worked on a string of high profile mandates for the firm.

The M&A stakes could be higher in 2011, with bankers hoping for the start of a new multi-year cycle that will feature more companies looking for advice on takeovers and an increase in cross-border deals.

"I sense that people will still be using cash and rising share prices to fund M&A in 2011, which means there will be less need for leverage and (which) plays again to the strengths of Goldman and Morgan Stanley," Moeller said.

Thomson Reuters preliminary data showed announced M&A grew by nearly a fifth in 2010 to $2.25 trillion globally, with bankers and analysts expecting a further rise in the year ahead.

Morgan Stanley's role on the $62.5 billion restructuring bailout for crippled U.S. financial group AIG — not yet included in this year's data — is set to give the bank a strong boost in the league tables next year.

Goldman and Morgan Stanley declined to comment.

© 2014 Thomson/Reuters. All rights reserved.

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