Goldman Sachs Anticipates A Less Robust Dealmaking Environment
Goldman Sachs is anticipating a quieter dealmaking environment. Apparently, there are economic factors affecting private equity transactions. Reports from executive Jim Esposito make the following claims.
Esposito was seen speaking at the Reuters NEXT conference in New York. There, he mentioned that the dealmaking conditions would be somewhat less robust in the medium term.
Over the past 18 months to two years, the private equity industry faced challenges in returning capital to investors and monetizing assets.
Esposito explained that the process of raising money, investing it, and returning it would be less efficient moving forward.
The global mergers and acquisitions activity did not show significant improvement in the third quarter. Hence, there was a rebound in the United States, the world’s largest investment banking market. This, in turn, showed hope for a sustained recovery in the near term.
During the September quarter, the total value of M&A slightly came to $717.4 billion. This was a slight decrease from last year, where the total was $738.1 billion. These figures were according to reports by Dealogic.
Following the recent Federal Reserve meeting, equity markets gained confidence.
According to the speaker, after the central bank decided to keep rates steady, some companies opted to sell equity shares.
This month, the Fed maintained its overnight short-term interest rate target between 5.25% and 5.5%, retaining the possibility of future rate hikes due to inflation persisting above its 2% target.
Esposito discussed Goldman’s decision to reduce its efforts in the consumer sector. Esposito commended the bold decision made under David’s leadership. He commended the bravery displayed by the firm in scaling back its consumer focus.