Goldman Sachs sees M&A "room to run" in 2016, despite global activity dropping after record 2015

William Turvill
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Goldman Sachs advised on more than $1.8 trillion in announced deals last year (Source: Getty)

Goldman Sachs sees "room to run" in mergers and acquisitions (M&A) this year, despite global activity dropping 20 per cent so far in 2016.

In a letter to shareholders, chief executive Lloyd Blankfein wrote that equity markets are showing signs of “sustained stabilisation”.

And he said Goldman Sachs sees “consolidation opportunities" in industrials, energy, mining, food, media and telecommunications sectors.

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“By most measures, 2015 was a robust year for M&A,” he said. “However, volumes as a percentage of market capitalisation are still below prior-cycle peak levels.

“We see this as a sign that there is still some room to run for M&A activity, particularly when equity markets show signs of sustained stabilisation.”

His letter was sent shortly after the planned $160bn (£113bn) merger of US company Pfizer and Ireland's Allergan was abandoned last week following a US government crackdown on so-called tax inversions.

There were fears the new tax inversion rules could put a dampener on global M&A volumes in 2016, which are significantly down on record levels seen in 2015.

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Last year, more than $5 trillion of deals were announced. But 2016 has been a different story with M&A volume of $749.8bn in the first quarter, down 20 per cent on the same period in 2015, according to Dealogic.

Figures also show that between 1 January and 6 April, $376bn worth of M&A deals were withdrawn – more than three times the $90bn in the same period in 2015 and the highest level on record since 2007.

Goldman Sachs was the highest ranking bank for M&A volume last year. According to Dealogic, it advised on more than $1.8 trillion in announced deals.

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