Photographer: Victor J. Blue/Bloomberg

‘We're No. 1,’ Say Three of Wall Street's Top Merger Advisers

  • Goldman Sachs, Morgan Stanley, JPMorgan all claim M&A crown
  • Rank matters when wooing CEOs considering deals, analyst says

When it comes to the lucrative business of advising corporations on buying rivals or selling themselves, it pays to be the leader.

So it’s not surprising, perhaps, that three of Wall Street’s biggest banks all claimed to be the best dealmaker in the first quarter. Goldman Sachs Group Inc. and Morgan Stanley each touted their No. 1 position this week atop their earnings statements. JPMorgan Chase & Co. made the point last week in a slide titled “select leadership positions.”

“They’re all vying for bragging rights,” said Charles Peabody, an analyst at Portales Partners. “It’s important in their marketing, when they’re trying to convince a CEO to do a deal, to show the credibility of your deal history.”

Investment banks have long sliced and diced merger league tables to cast themselves in the most favorable light and show they’re the best choice for upcoming transactions. The incentive has rarely been stronger than this year, when earnings from advising on takeovers has held up relatively well amid a slump in trading and underwriting stocks and bonds. Income from advisory arms slipped 6.6 percent in the quarter, compared with a 22 percent drop from trading, according to data from the five biggest Wall Street firms.

Goldman Sachs ranks No. 1 by the volume of new deals announced in the first quarter, according to its release. But as the bankers on the canceled $160 billion tie-up between Pfizer Inc. and Allergan Plc know, announced transactions don’t always get consummated (Goldman helped advise Pfizer). Meanwhile, Morgan Stanley said it ranks first in completed deals. JPMorgan, not to be excluded, said it’s taking home the largest share of the global revenue pool generated from advising mergers -- about 11 percent.

‘Don’t Care’

Analysts typically place the most weight on announced deals, because that hints at future revenue, Peabody said. And on that basis, excluding canceled transactions, Goldman Sachs ranked No. 1 in the quarter, according to data compiled by Bloomberg. Regardless, advisory probably peaked last year, the analyst said.

“I really don’t care who’s No. 1,” Peabody said. “We’re now seeing the areas of strength from the last year and a half show signs of abating.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE