Goldman Sach's (GS) presents a golden opportunity for those bullish on M&A activity in 2019.
Shares of the big bank have soared in mid-day trading, bolstered by a big earnings beat that was helped in no small part by huge profits in M&A advisory.
The investment banking segment for the bank was credited with $2 billion in revenue, with the completion of M&A deals cited as the prime mover of the results. The strong performance helped advisory revenues leap 56% year over year, to $1.2 billion.
"We ranked number one in announced and completed global M&A for both the fourth quarter and the full year," CFO Stephen Scherr told analysts during Wednesday's morning's conference call. "We advised on nearly 400 transactions that closed during the year representing approximately $1.2 trillion of deal volume. We also participated in announced transactions totaling nearly $1.3 trillion which included over $450 billion from transactions below $5 billion in deal value reflecting progress in broadening our client coverage."
The pipeline ahead for 2019 could continue to fuel these eye-popping results.
"Corporate and private equity executives focused on mergers and acquisitions anticipate further acceleration of deal flow in 2019-both in the number of transactions and in their size-which would further extend several years of record M&A activity," Deloitte reported in its 2019 M&A trends outlook.
The report states that 76% of M&A executives at US-headquartered corporations and 87% of M&A leaders at domestic private equity firms expect the number of deals their organizations will close over the next year to increase from 2018's strong year.
Blockbuster deals like Bristol Myers Squibb's (BMY) $74 billion deal for Celgene (CELG) , Eli Lilly's (LLY) $8 billion deal for Loxo Oncology, and Takeda Pharmaceutical's (TAK) $62 billion buyout of Shire Plc have already signaled this anticipated appetite.
Goldman is already cashing in only two weeks into the year.
The firm is acting as the exclusive advisor on Eli Lilly's deal with Loxo, advising on Newmont Mining's (NEM) $10 billion offer for Goldcorp (GG) , and teamed up with Nomura to close Takeda's titanic takeover, displaying its prowess in the profitable segment.
The firm may have missed the boat on big opportunities available with Bristol Myers Squibb's big-time bid for Celgene and Fiserv's (FISV) $22 billion buyout of First Data Corporation (FDC) , but the preponderance of evidence suggests Goldman should continue to succeed in its advisory practice that is promoting its stock performance on Wednesday.
If action across the M&A space stands to accelerate beyond its gangbusters beginning, Goldman could be a key stock to cash in on as the deal pipeline develops.
