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Goldman Sachs: M&A and IPO activity should increase

May 31, 2013: 2:11 PM ET


Goldman Sachs president says investor confidence has weighed on deal-making.

FORTUNE -- Goldman Sachs believes that M&A and IPO volume is artificially low, driven down by soft investor confidence.

In a presentation given yesterday at the Bernstein Strategic Decisions Conference, Goldman Sachs (GS) president Gary Cohn showed that global M&A volume in 2013 only represents around 4% of global market cap, compared to a 20-year average that approaches 7%.

IPO volume came in at around 0.2% of global market cap, which is just half the 20-year average.

What does that mean in terms of dollars? Well, Cohn says that just closing half of the gap between current M&A volume and historical averages would mean around $700 billion in additional activity. On the IPO front, where U.S. issuance has begun to  climb, the addition would be approximately $50 billion.

Cohn chalks most of this current discount to poor investor confidence due to macro-economic concerns, but also says that he expects confidence to improve. If he's right, expect the recent IPO bump to continue and for M&A to follow suit.

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Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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