M&A league tables: The top spot in the M&A league tables may be going down to the wire this year but there’s one clear winner whichever bank wins: advice. Either Goldman Sachs or Morgan Stanley will be number one as they and the rest of the competition engage in the vainglorious year-end jockeying for position in the rankings. Even after the credit crisis, balance sheet banking has yet to muscle its way to the top.
Goldman sustains its perch regardless of which way the M&A winds blow. It charged through the dot-com bust, the leveraged buyout bubble, the financial crash and the many tentacles of its own reputational woes to remain the firm chief executives and boards want on their side when it comes to making deals or fending them off. Though Morgan Stanley snatched the laurel last year in the Thomson Reuters list, if Goldman can see off its storied rival for 2010, it will have worn it nine of the last 10 years.
The one-two finish of the surviving major investment banks, accompanied by the growing presence of boutiques on major deals, seriously dents the pervasive theory that waving a checkbook at clients will be enough to win their business. Though most banks have been deleveraging, if offering capital didn’t score sufficiently big advisory mandates in a credit crunch, it’s hard to see when the sales pitch will prevail.
The non-cyclical nature of league tables in a highly cyclical M&A landscape may be fairly simple to explain. The tougher the deal-making environment, the higher the premium there is on trust and perceived expertise. And conversely, the looser the credit climate, the easier it is to secure financing without picking an adviser based on its ability to lend.
That leaves Bank of America, Barclays and JPMorgan with a tough sell. Each threw its balance sheet behind an investment bank three years ago. Yet the addition of Merrill Lynch, Lehman Brothers and Bear Stearns, respectively, hasn’t propelled them to the top of the charts.
True, JPMorgan will finish third this year in the M&A rankings – but a distant third. As Barclays continues to build out in Europe and Asia, Lehman hasn’t budged from its number 10 spot on the league tables in the three years since its US operations moved under Barclays’ roof. And the BofA Merrill duo has actually slipped – from third in 2007 to the number seven spot this year.
The banks can scratch and claw for all the last scraps of deal credit they want. Either way, the kings of the jungle can rest easy for now.
