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Big, Bold, Strategic Moves: The 2021 M&A Outlook


Stephan Feldgoise and Mark Sorrell, co-heads of global mergers & acquisitions in Goldman Sachs’ Investment Banking Division, discuss the key drivers behind historic levels of M&A activity, their positive outlook for dealmaking in 2021, and the resurgence of cross-border transactions. 

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
This is exchanges of Goldman Sachs were discussed, velvets, truly shaping markets, the trees and the global economy. I'm Jake Seaward Global, had of corporate communications from today at the latest in Epinay, and whether the sharp rebounded activity that we ve been seeing will continue were joined by sea. One felt guys and marks around the global co heads of mergers and acquisitions in the investment king division here at Goldman Sachs Stefan Mark welcome the problem. Seven. Austria, with you, set the stage for US problem about emanate at the tail end of twenty twenty. Obviously, we saw big come back and activity in the second half after deals, so the ground to a halt. When the pandemic. First, tat talk a little about the two parts a last year: the scale of the uptake and volume that result
sure thing. It was definitely a tale of two cities from a global emanate perspective, the first half of the year, down significantly, as you mentioned, but you're just statistically just to do some perspective from support her first, the end of year, it was the most active emanate market history with almost one point. Eight trillion in activity which effectively was double the first half of the year. a little bit of our is we look towards twenty twenty one knew that the Euro started off? He doubled, Again, what the first half of last year was, which was the preponderant period, but you know, companies really retraction. As we came out of the first half of the year once they became but I'll call some light at the end of the tunnel around the attention for vaccines, companies moved aggressively and position themselves both from a risk perspective, as well as from an opportunity perspective folks across the spectrum, whether it be technology, consumer industries, health here. I'll came out and said: I'm gonna make moves now, even though obviously were stolen by awfully towards the end, but still in the pandemic.
by the way, deals are getting gun in this in a crazy pandemic era. Mark talking but you experience advising companies and Emily virtually typically. This is an intensive in person. Experience how's, the virtualization of everything. Changing the way deals get down and how might that change going forward? Thanks, Jake, I think you know just to give you the star, since the pandemic really got in the worst phase and chew. To last year, we ve announced over a hundred transactions, a significant majority of which were completed fully virtual which I think surprised us greatly. I think one of the reasons I am we ve talked applying. Second plants actually see with hindsight quite a lot of benefits from that the one I wouldn't How the most would be a more efficient use of management, time, less travel, more focus,
more focused interactions, and I think we will see many of the things we ve seen, including yet I'm more virtual management meetings. You know we ve seen drones did you use for site visits and a few other innovate. Like that, I think will see many of them continue because they bring significant benefits for clients and, ultimately, I think we were guided by foreign preference, so I've met Those things will continue. The one outside would put on that Jake. But you know a lot about business and cross border emanate, for example, not transatlantic, I think that's thought about business that historically were would reliant on travel. Person, interaction, and I think you know what we see- that the first signs of life and the increased activity in that how business and I think that the face to face out about what about this? will still be very important, so going forward as we contemplate a period ahead where there is much broader. Justin
Should the vaccine, and perhaps the worst the pandemic is what's the outward for a minute later in twenty twenty one part what's wrong with you what we see in key for twenty, twenty and and yet today, to low it's only a few weeks, but yet today, as well in twenty twenty one, is a really clear up taken amount of strategic dialogue with clients, but both corporate and in private capital, and so I think the back job here is now a high degree of confidence that, West of the pandemic will be over. You know at some point in the second half of this year as vaccines come through that door this will really regime in a very strong way. Particular, I think in the U S but to say, extent in Europe as well, and against that backdrop, many clients have very attractive stop prices, and obviously the financing markets are very conducive to emigrate
You put all of that together and I think you have a environment where many many clients are looking to position their businesses for Austria, The period of grace awfully from the second, of this year and next year. So I think my summary would be huge amounts of dialogue. Real conversation around important strategic moves, declines to position that businesses to be ready for a period of what will hopefully be strong growth. Since then You were talking about just how busy it is the beginning here. What are the main drivers you're seeing for that gonna go. dropped about looking in that positive sentiment right now drink. I think there's patriot or think one completely open capital markets. He went back to the finance crisis back into eight hundred nine. The banks were the quiddity constrain, the banks have not in liquidity, constrain and so any already, those looking for financing and financed financing and that's on the debt or, frankly, on the equity side. You think about the Mount. A cap of bits enraged by private
equity, the sovereign wealth funds, I'm sure talk a little bit about backs. The amount of capital and equity sides is important, actions is tremendous and then most importantly, boards of directors and investors are encouraging their corporate clients and the companies. They ought to think aggressively about right listening, but also finding growth. The net largely been domestically is marked said, but we I certainly expecting the cross border, the international expansion and and an aid to come back to life and twenty twenty one, the merchant. I am glad the deals that were being done were opportunistic mergers of unsolicited hostile approaches. Has that change in this environment and given the amount of dry, powdery private equity that Stefan referred? What are we seeing in hearing around the sponsor segment? High stakes? What we are seeing at the moment is plants willing to make a big bulbs strategic
I put Klein since it by corporate plans and private capital, so I think these are would you transaction Iris transactions in terms of size and complexity and complexity. not many elements, financing regulatory risk, the irish people So there is a second rate, a risk appetites, amnesia, greater willingness. I think what goes with. That is a way and thus to the white transactions We also more aggressive- and we see that in terms of not taken no more unsolicited situation, and some more fully hostile situations, but in terms of bond sentiment to come to your question on private equity in particular, I would say that that boldness is already apparent in the private equity and private capital industry generally, I think when you think about the amount, try powder, the ability to write very large equity checks, the different pools of capital
this between private equity, long, some capital, also the infrastructure, traditional infrastructure family offers sovereign wealth funds that the rules of puppet lad check size, the willingness to be bold, the willingness to also be innocent, if in transaction structure it all. driving increased activity Since the vote, we talk to a limp here on the programme about continued momentum, IRAN's backs as an alternative path for companies to raise money in the public market. So how does this fact food which really took up last year, but his continuing this year, China The emanate market, I mean, there's a large amount of capital that is now looking for many targets- and I think that will play out this year- look, I think, from the speck perspective. It sleep very topical now and certainly relevant both to the european market and the yemeni market. Many companies can choose to go
with an ip out. Some are certainly choosing to go through spats, there's a large number of certainly very highly qualified individuals, former executives form of bankers, former founders of companies Failure which backs- and so there is certainly but I'll- call in attractiveness to that angle. But there is also a lot of companies going public through traditional means, and so it remains relevant to the ideal market. Only emanate sighed again I'd, say so. It means very relevant. There is obviously hundreds of space now talking to companies about taking them public, how it evolves, whether corporations get more involved Lee terms are forming their own backs. Obviously, private equity has started Get involved in this back arena will see how private equity gets involved with it, but it's a less relevant right now and is it driving
The energy market overall, I'd say: probably not forbid. Activity remains central and remains the main driver of the energy market, but this back market is relevant, but again, I think it's more of day, alternative path. Right now, for companies to become public companies that it is changing the yemeni market in terms of companies who thought about it. Many now doing emanate because its back, that's it that's not the case it still. If a corporation things emanate introduce strategically that's how their thinking about it and spat. Maybe a patent choose as part of that, but it's not necessarily the driver of what were seen in terms of robust activity in Germany, market, so before we wrap up I'll, give you both the chance to answer this question with the recent uptake. in emanate activity. We ve certainly seen some deals over the ten billion dollar size in some cross border activity. Despite fears at the beginning of the pandemic about a decline in globalization, do you expect to see more big ticket emanate,
whilst crossborder emanate continue and what is that means your business. So. and start mark. We certainly expect what Paul Cross border activity to come back between companies in different continents per se, but every man Your transaction, even if within a given country right now, is an international transaction. In that almost every company is international. And so the impact of how either When governments are regulatory bodies, view transactions, relevant in market transactions as well, but again, we have seen less be collaboration asian country, a merging with company in country B, but we certainly expect that the combat I'll tell you the level of dialogue right now amongst are are. These clients is certainly wrapped up at the end of last year, but certainly to the beginning of this year, and they are things about large global repositioning as critical to their strategies. They go through twenty twenty one, so certainly basin
we're having in the use of our clients, airports and their shareholders would expect a large tickets and certainly the cross border. To return the I would agree, step without doubt with seeing the number of large in a ten billion dollar, plus situations increasing rapidly through the second off twenty twenty and continuing this year, and I think we believe that visions are conducive to big old maids and if you look at stop prices and ability to finance large check sizes, both the corporate and private capital base would all eight. Bigger transactions will continue to increase everything as we get closer to, hopefully, the other side of the then it, but will also include a bigger cross border activity well It sounds like both. You have a lot of work near so set remarked thanks for joining us today. Jake thanks, ravenous thanks jack. That concludes this item. Change, the Goldman Sachs. Thank you very much for listening.
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Transcript generated on 2021-07-01.