Goldman Sachs’ leads deals in Europe

Goldman Sachs, the Wall Street bank, is shifting its focus to sports deals, the clean energy transition, and smaller M&A transactions in Europe, as investment banking fees in the sector continue to decline. Gonzalo García and Anthony Gutman, co-heads of investment banking for EMEA, stated that the bank aims to expand its expertise in-house and is actively hiring dealmakers to identify areas of growth.

Due to factors such as rising interest rates, inflation, and gridlocked leveraged finance markets, banks have been struggling with a decrease in dealmaking over the past 18 months. Investment banking fees have dropped by 33% this year, resulting in job cuts across the industry, including at Goldman Sachs.

García, who previously led Goldman’s natural resources investment banking team, highlighted the need for European companies to adapt to the new energy reality and shift towards cleaner fuels. This transition is expected to generate substantial fees from M&A and financing work and will impact every aspect of the bank’s business. Garcia emphasized the importance of educating all bankers on these developments to provide comprehensive advice and financing solutions to clients.

In addition to the clean energy sector, Goldman Sachs is targeting the Middle East for expansion and actively pursuing opportunities in emerging markets such as agri-tech, clean-tech, and sports. Gutman stated that the bank aims to be agile in reallocating resources to capitalize on these opportunities.

Goldman Sachs plans to strengthen its mid-market dealmaking team, focusing on areas where deal activity remains high. Despite job cuts earlier this year, the bank is now looking to hire again and redeploy bankers from less active areas of the business to support regions with increased activity. Gutman emphasized that the bank’s priority is to attract the best talent, regardless of the current banking turmoil.

In terms of regional focus, Goldman Sachs has been building out its dealmaking teams in continental Europe. The bank has relocated dealmakers from the UK to cities such as Paris, Frankfurt, and Milan, establishing them as key hubs. The aim is to be closer to clients in other European locations and adapt to the changing dynamics caused by Brexit. Goldman Sachs is also shifting the balance of its intern and graduate group, aiming to have a more representative sample based in Europe consistent with its business mix.

Goldman Sachs faced criticism in 2021 from its junior bankers due to grueling working hours. In response, the bank has made changes to its junior programme, implementing an evolution that includes more client interaction, in-office training, and social activities. Automation has also been introduced to free up time for junior bankers to engage in higher-value activities.

Goldman Sachs, which finished second in the EMEA investment banking fee league tables last year, aims to maintain its strong position in the M&A fee rankings while adapting to market conditions and pursuing opportunities in growing sectors.