Goldman Sachs is among Wall Street's elite investment banks. Should it be looking abroad for deals, or is the U.S. still the place to be?
Excellent cold-water-to-the-face post on Wednesday by Steven Davidoff, the New York Times' "Deal Professor." He questions whether the American investment banking model, stymied at home, can find Elysian fields of opportunity abroad. Then he offers this answer:
If you’ve been anywhere near a Wall Street conference in the last five years, you know the drill. Deal makers bemoan the United States as a mature and overregulated economy. They talk about heading abroad, as emerging market economies leave us far behind. To listen to them, one might think the rest of the world was a paradise out of “Atlas Shrugged,” where capital flows and where private equity, investment banks and other investors can freely seek opportunities.
So what country is No. 1 in initial public offerings so far this year? Yes, it is the United States, according to Renaissance Capital, with 75 I.P.O.’s raising $39 billion in total. Compare this activity with China, where 41 I.P.O.’s raised just $8.1 billion.
And in mergers and acquisitions? Again, it is the United States, with 53 percent of the worldwide deal volume, up from 51 percent from last year, according to Dealogic. For investment banks, this means that the United States has a 46 percent share of the $63 billion in worldwide investment banking revenue, up from 34.6 percent in 2009.
The rub here is that all that maturity and regulation actually makes the U.S. a better place to operate as an investment bank than elsewhere. Who says you can't go home again?