00:00I'm so pleased to say we have the one trillion dollar man with us. No not Elon Musk. It's Goldman
00:05Goldman's head of M&A global M&A. That's Stefan Feldkoi.
00:09Thank you so much for joining us and congratulations on this. So you beat out last year's record by one
00:15month.
00:16That I mean if you if I could go back in time and tell you that you would achieve that
00:19at the start of this year when war was breaking out.
00:22Trade issues were still ongoing. We had this AI disruption. I don't know if you would have believed me.
00:27Are you surprised at just how robust this year has been for deal making?
00:30I think it certainly exceeded expectations coming into the year. We thought it would be an up year.
00:36It's always hard to predict how the year will play out. When we came out of 2021, I didn't expect
00:41any time in the near future to exceed the volumes.
00:43We saw I remember the SPAC wave and it was a big corporate and private equity M&A year.
00:47But we really seen an extraordinary amount, particularly on the corporate side, large corporate transactions.
00:53You've seen over $100 billion in one transaction this year. And obviously, as you say, AI is driving an extraordinary
01:00amount of corporate activity.
01:01Is that just what? Are they trying to get ahead while the regulatory environment feels good?
01:06Because you could make the argument that because markets and they've been at all time highs, but considering all the
01:10uncertainty, maybe it's a time to pause and not get that done.
01:13So what gave CEOs the confidence to ink deals?
01:16So I'd say it's not just CEOs. It's CEOs. It's boards thinking in decades, not in one particular year.
01:23This is not an issue of saying I need to rush to get something done.
01:26We saw real strategic thinking and repositioning coming out of COVID.
01:31As the markets ramped, as equity markets and debt markets recovered, as regulatory environments changed, large transactions got done.
01:39But it's all about strategic thinking, not for the next year, but for the next 10 years, 20 years, 30
01:43years, particularly with AI, which obviously is a existential impact on lots of corporations and markets.
01:50You have to think in decades, not in days.
01:52By the way, are we living in the salad days of this boom right now?
01:56Because it's not just a trillion, I imagine, in total deals.
02:02You're making fees on this that aren't at a discount, right?
02:07Look, we don't think about fees.
02:09We think about serving clients.
02:11Obviously, an increase in M&A activity is good for M&A practitioners.
02:15It's been good.
02:15You've seen our results.
02:17But again, we don't focus year to year.
02:19We don't focus quarter to quarter on fees.
02:20We focus on client service.
02:22We focus on long-term client relationships, which is why we think we've been in an advantaged position in terms
02:26of our market share.
02:28Clients may not do transactions for decades.
02:30We have many clients that we invest in for decades who then decide to do something important.
02:34And we've invested in years in the relationship, a trusted relationship, and that's why we get hired.
02:38But yes, it's good for M&A practitioners.
02:39But again, we really need to think about the client relationship.
02:41You mentioned that this is driven by the big deals.
02:44I know, like, NextEra Dominion was one of these monster deals.
02:47But when you look through the league tables, that's what you see.
02:50You don't really see sponsors.
02:53You don't really see private equity as much.
02:54They feel like they've been really missing, which makes maybe $1 trillion even more notable.
02:58What does it get to bring private equity back?
03:01We've all been talking for a long time about the private equity portfolios and the monetizations and the return of
03:06capital, the pressure that they're all facing.
03:08That continues.
03:09That being said, there's been continuation vehicle markets.
03:13There's been private capital.
03:14So there's been ways to extend duration on those portfolios.
03:17But that being said, we've seen the trillion dollars of M&A that we've talked about with a muted private
03:22equity market.
03:23It typically is 30% to 40% of the M&A market private equity.
03:26It's running between 20% and 30%.
03:27And so if corporate activity continues and private equity actually accelerates, maybe you'll see a little bit of cannibalization across
03:35that.
03:35But you could see an increase in M&A on top of what we're seeing already.
03:38I didn't mean to be gauche with my fee question.
03:40And it wasn't about, like, you're making so much money.
03:43It was about the fact that you have the pricing power or rather your clients are willing to pay whatever
03:49it takes.
03:49And we were talking earlier this year and last year about the fact that some of these big AI companies
03:56like OpenAI were doing deals without fully vetting them by lawyers, you know, not using as many bankers as they
04:02previously had because they wanted to get them done quickly.
04:03And I wonder if you sense that rush in this market.
04:08We really haven't seen corporates doing a large number of transactions without advisors.
04:13I think we believe we've had value and that they find value in that.
04:18But they want to get them done fast.
04:20They want to get them done now, right?
04:21You need to get a leg up.
04:23Pace matters.
04:24And we've been extraordinarily busy.
04:25We have a very large team.
04:26But people have been working really hard.
04:28And we have a broad group of folks from our analysts to our senior partners who are fully engaged.
04:33And it's been an intense first half of the year.
04:36And we'll see how the summer goes.
04:37But people have been working extremely hard.
04:39And, you know, to Matt's point, you mentioned this, too, just AI spurring a lot of this.
04:44When you're looking at the deals being done, how do you sort of define what looks like a successful deal
04:50that's defensive, that's adding on some sort of AI capability versus just, like, pure panic in the boardroom?
04:55I wouldn't say there's panic in the boardrooms.
04:58But AI is having a very broad impact.
05:00We saw very large power transactions, which obviously provide the electrons.
05:03We've seen data center transactions.
05:06But in addition, when you think about traditional consumer businesses or other businesses who are thinking about AI is going
05:12to enable them to be more efficient.
05:14And the more scale that they have, the more that they can apply AI tools to that broader scale.
05:18It also, as you say, adds a degree of uncertainty to the forward.
05:21And so if we're going into a potentially uncertain era that AI might cause, having heft, being bigger, having more
05:29leverage with credit agencies, when you think about borrowing capital, when you think about different business lines, it's not just
05:35technology companies.
05:36It's affecting all industries.
05:37So the obvious question, you got to $1 trillion at this point.
05:40What does the second half of this year look like, Stephan?
05:43Well, I would say the dialogues that drove that $1 trillion, the levels of those corporate dialogues, continues at a
05:48very similar level to what we've seen.
05:50And, again, we've seen disruptions in the past.
05:52If you went back to when tariffs went in place, there was a period of four or five weeks when
05:56there was very little M&A.
05:57But then the year was roaring after that.
05:59But the dialogues continue at levels that we've seen.
06:01And back to your question on private equity, the pressure on private equity continues to build to think about monetizations
06:07of those portfolios.
06:08I wonder, I always think about the behind the scenes.
06:11And you mentioned how hard people are working.
06:13I believe it.
06:14Ever since I read Barbarians at the Gate, I've thought about, you know, these bankers, you know, in front of
06:18their computers doing the deals in boardrooms, like, until midnight, and then handing it off to the lawyers until they
06:23come back in at, like, 6.
06:25Is AI helping you with that workload, or are you able to let, you know, your first and second year
06:32associates leave before midnight because they are using Claude?
06:37I wouldn't say AI is dramatically changing the way we execute M&A.
06:42M&A is a relationship trust business.
06:44It's a decades-long relationship that you build with boards and CEOs and senior executives where, in their most important
06:52decisions, they can trust your advice.
06:54So, of course, the support analysis and all that work can be supported with AI.
06:58It can make some things faster.
07:00But all the way from analyst to partner, it's a trust business.
07:03And what is that relationship?
07:04And in the end, it's about giving good advice to clients that's in their long-term best interest.
07:08Stephan, we're going to have to end it there.
