In an interview with Bloomberg’s Cristina Alesci, Gregg Lemkau, global co-head of M&A at Goldman Sachs Group Inc (NYSE:GS) explains why the trend of big transactions will continue and talks about Goldman Sachs’s aspirations to regain its top spot in M&A rankings by year-end after losing out on a few deals during the first quarter. In addition, Goldman Sachs Group Inc (NYSE:GS) has its own metric when assessing its first quarter performance: Lemkau said Goldman advised on more deals over one billion than other bank on the street.
Lemkau on Goldman Sachs losing its M&A edge last quarter:
“I think we are less focused on where we are on league tables at the end of a quarter than we would be at the end of the year….our aspiration would be to get to number one by the end of the year….the one thing we look at is number of deals…we tend to look at who is advising on more deals over a billion dollars than anybody else and on that metric, as of the first quarter, we are number one.”
On CEOs willingness to do larger deals today than four, five years ago:
“CEOs are willing to do larger strategic deals really for the first time in four or five years. If were to talk to clients about big transactions at any point in the last four or five years, they were intrigued by it…sort of intellectually interesting but they weren’t really engaging in it. You’ve got an environment right now, where the conditions that have been there ….are still there but there is no looming crisis….”
On today’s market drivers:
TMT and health care have been big drivers. We’ve seen a pickup in consumer activity year-to-date. I think if we had three of our engines running, not just two, I think that would really be fuel to a recovery. If you think about what those could be, I think industrials is likely to see some activity. You know natural resources has been a big driver of M&A activity over time. I don’t see it coming back in the near term, there’s still some digestion they need to do of the big transactions they’ve done in the past. And then if you go back over a long period of time, financial institutions has been a big driver of M&A activity, I think until the regulatory picture is clarified that’s unlikely to happen anytime soon.
“There are a lot banks that would like to work with Facebook Inc (NASDAQ:FB) on their strategic activity and I think they will aspire to do so and that tends to be the case with a lot of these companies that are taking their own counsel. If you look at the kinds of transactions Facebook Inc (NASDAQ:FB) has done, you are looking at earlier stage companies and our sense is that those discussions are driven by the principals and often times, they can get that done without bankers.”
On FCC and DOJ attitude toward further consolidation in certain industries:
“I think the biggest risk to an M&A recovery is likely to be regulatory. And I think that gives a lot of clients pause. When you’re in a boardroom and you’re thinking about a big transformational acquisition or transaction for your company, you don’t want to be in a position where you announce it and you don’t get it done. And the regulatory environment right now is one that is concerning for people that are considering them.”