Goldman Sachs Group Inc arranged US$778 billion of mergers and acquisitions this year, the most by any investment bank in five years, pulling past Morgan Stanley in the last quarter to extend its streak as the world's top dealmaker.
Morgan Stanley had the biggest gain among the top M&A advisers, increasing its market share by seven points to 27 percent and rising to second place from fourth last year, according to data compiled by Bloomberg. Goldman, which has led the M&A rankings since 2001, worked on 30 percent of all transactions by value, up from 28 percent.
Mergers worldwide may swell to a record-tying US$3 trillion next year as companies use growing stockpiles of cash to finance takeovers, according to forecasts by Morgan Stanley and Lehman Brothers Holdings Inc. This year, the value of announced transactions rose 33 percent to US$2.58 trillion, the biggest year for M&A since the Internet bubble burst in 2000.
New York-based Goldman, the world's third-largest securities firm by market value, handled 11 transactions for US$10 billion or more in the fourth quarter.
Morgan Stanley, which led the M&A rankings through Sept. 30, fell behind after some of its top dealmakers left during a revolt by shareholders and former bankers against then-Chief Executive Officer Philip Purcell. The No. 2 securities firm wasn't involved in fourth-quarter transactions such as Telefonica SA's ?17.6 billion (US$31.1 billion) agreement to buy mobile-phone operator O2 Plc and Koch Industries Inc's US$20.1 billion purchase of papermaker Georgia-Pacific Corp.
Joseph Perella, 64, one of Wall Street's M&A pioneers, quit Morgan Stanley as vice chairman in April. Two months later, he advised on MBNA Corp's pending US$35 billion sale to Bank of America Corp, the fourth-largest deal of this year. Morgan Stanley didn't win a role.
Purcell, 62, stepped down in June and John Mack, 61, replaced him as chairman and CEO.
Even with the disturbances, Morgan Stanley's head of M&A, Paul Taubman, 44, led the New York-based firm to about US$700 billion in transactions. That's Morgan Stanley's best performance since 2000, the last time it ranked No. 1 in mergers.
The firm won a role in this week's biggest deal, Hilton Hotels Corp's US$5.7 billion agreement to buy the lodging unit of the UK's Hilton Group Plc. Switzerland's UBS AG and Charlotte-based Bank of America Corp also advised Hilton Hotels.
While M&A typically accounts for less than 10 percent of revenue at Wall Street's biggest firms, it's the most profitable client business after trading. Bankers use rankings in the so-called M&A league tables to promote themselves to potential clients.
Proctor & Gamble Co's US$57 billion purchase of Gillette Co, the year's biggest deal, was arranged by Goldman, UBS and Merrill Lynch & Co. Each firm received about US$30 million in advisory fees.
UBS, Europe's biggest bank, also advised MBNA on the purchase by Bank of America. UBS advanced to sixth in the M&A rankings from 10th last year and increased its market share by almost seven points to 18 percent.
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