Goldman Sachs sees momentum building for more deals

Goldman Sachs CEO David Solomon sees less red tape as a big opportunity for the market, but cautions on regulatory uncertainty. Picture: Olivier Douliery/AFP

A US regulatory regime shift has the head of one of the world’s largest Wall Street banks, Goldman Sachs boss David Solomon, signalling good news for dealmakers.

Private equity firms have been on the sidelines when it comes to mergers and acquisition, he says, but they are “starting to unleash”.

And signs are starting to emerge of that, based on the number of talks he is having around the market of late about large scale M&A transactions, he says.

As a result, this could push the level of buyout transactions above historical average levels.

Mr Solomon has flown to Australia this week from the US.

Speaking at the 2025 Business Summit in Sydney on Tuesday, he said the election of US President Donald Trump has created some market euphoria, and there was an increase in the dialogues the investment bank was having around significant M&A transactions.

“M&A activity has been a little slower to materialise, but that is not surprising.”

Part of that was to do with private equity with large amounts of capital needing to move on asset sales and acquisitions.

Helping dealmakers has been the Trump administration’s far more growth centric agenda from the private sector, and its hard look at the levels of spending, the deficit and debt, where it was going to try to make some progress.

Yet caution existed while there was still a lack of clarity on how immigration, tax and fiscal policy would be implemented, and he said he hoped that became more clear, Mr Solomon said.

“I think overall that is healthy and would be quite productive.

“However, it is complicated to execute and if you look at the policy initiatives being discussed, there is a lot of uncertainty around the policy initiatives.”

M&A and capital market levels for the last few years had run below ten-year averages, partly because of burdensome regulation and uncertainty around the election last year.

But he believes the pace of activity is increasing and will run above those levels.

New York-based Goldman Sachs is the second-largest bank in the world by revenue, one of the top ranked banks in the world for investment banking and markets services, and it is also among the six largest asset managers globally with $US1trn of assets.

The banking chief that has gained a name for his recreational pursuit of being a DJ, and has performed in nightclubs, said that there were fewer public companies, and he attributed part of this to the way investment infrastructure had evolved and there was very little formation of small and medium-sized businesses.

“I think that is something we should be concerned about,” he said.

“We should allow our public markets to be much more broader, but I think through regulatory policy and structure we are going in the other direction – that is going to lead to the heaviest weighting to the larger companies.”

Mr Solomon said he was not anti-regulation, but there needed to be appropriate regulatory structures to function well.

There was a tendency for them to become overly burdensome and continued to hamper growth.

Regulators had a responsibility to get the balance right, and rather than looking through the rearview mirror of the world, have a more expansive view.

He said there was a narrative that was developing on regulated markets and regulated participants and unregulated markets and unregulated participants.

“I think it is important to note there is one market and different people participate in it. It is all interrelated.”

Mr Solomon added that it was “quite some time” since the market had seen a credit cycle, and he believed excess was building up, but he said it was important for regulators to keep an eye on where the market was going, not where it had been.

“I am not suggesting it is going to create a systemic problem, but it is important to look forward and understand where are the exposures and making sure the playing field is level.”