Goldman Sachs has a positive outlook for mergers and acquisitions (M&A) activity in 2016 despite a slow start to the year.
The bank’s president, Gary Cohn, has said the conditions that led to a record year for M&A in 2015 still exist, as he talked up the business’s future prospects.
“We still think in this lower growth environment with very cheap financing and low rates available that we’ll continue to see more of that merger activity over this part of the cycle,” Cohn told an investor conference in New York, Bloomberg reported.
Cohn said cost savings “drive the M&A cycle last year”. And he added: “Companies could merge themselves together and the rationale for the merger was to cut out expenses of duplicative costs.”
Last year saw more than $5 trillion worth of deals announced, according to Dealogic statistics. The total for the first quarter of 2016 was $749.8bn, down 20 per cent year on year.
Goldman Sachs also took a more positive view on M&A than most in April when chief executive Lloyd Blankfein wrote to shareholders saying he saw “room to run” in the area in 2016.