Goldman Sachs is increasingly optimistic about the mergers and acquisitions (M&A) market, driven by the concentration of several industries and an acceleration of private equity-backed transactions, according to its president, John Waldron.
"I think you're going to see more companies, CEOs, and boards taking action, much like what we're seeing in the railroad industry," he said at a conference organized by the Financial Times in New York.
"I would say we are more than optimistic. The growing interest we are seeing in discussions is really making us more confident," he added.
Last July, Union Pacific announced the acquisition of its competitor Norfolk Southern for $85bn, with the aim of creating the first US rail operator covering the entire country, from the East Coast to the West Coast. This deal could redefine freight logistics in the US, from grain to vehicles.
Globally, mergers and acquisitions totaled $2.6 trillion in the first seven months of the year, a record for this period since the peak observed during the pandemic in 2021.
John Waldron pointed out that deals backed by private equity funds are accelerating, a phenomenon that Goldman Sachs is also seeing in its own deal book. "We are reaching a point where this engine will start to run at full speed," he said.
The Federal Reserve's interest rate cuts should also stimulate activity by reducing the cost of capital for businesses, he explained.
From a macroeconomic perspective, Waldron expressed confidence in economic fundamentals, particularly in the United States, while acknowledging that trade and geopolitical tensions are holding back the global economy. "I have to say that the US economy is showing extraordinary resilience. Despite everything it has been through, it continues to move forward with strength," he said.
However, he warned that the US budget situation is unsustainable in the long term. "In the medium-to-long term, it would be much better for the US economy and for the health of the system if we got our spending under control," he said.
A budget watchdog group said in August that the US federal deficit would be nearly $1 trillion higher over the next ten years than the January forecast by the Congressional Budget Office. This revision is related to tax measures, additional spending laws, and tariffs.
Finally, John Waldron expressed concern about potential barriers to hiring talent globally. The Trump administration plans to impose a one-time fee of $100,000 for new H-1B visas, which could impact financial institutions, which are heavy users of these visas, even though technology companies remain the primary beneficiaries.
