DEALS-UPDATE 1-Goldman slides to 10th spot in U.S. M&A ranks

* Goldman drops to 10th for U.S. M&A from 2nd in Q4

* Goldman missed out on AIG restructuring, T-Mobile deal

* Goldman ranked No 4 globally; no 4 in Europe


By Megan Davies

NEW YORK, March 24 (Reuters) – Wall Street’s most powerful
bank, Goldman Sachs Group Inc, made its worst showing in U.S.
deal advisory rankings in more than two decades, sliding to 10th
place in the first quarter of this year.

While deal rankings can move around dramatically each
quarter, it is still embarrassing for Wall Street’s premier bank
to have fallen in the pecking order. League tables are closely
followed by bankers who compete hard for lucrative assignments
advising companies on mergers and acquisitions.

Goldman advised on $71 billion worth of U.S. deals
in the first quarter, far less than JPMorgan Chase & Co’s
chart-topping $170 billion, and even lower than much
smaller banks such as Rothschild, Evercore Partners Inc
and Lazard Ltd .

It is Goldman’s lowest quarterly ranking since Thomson
Reuters began tracking U.S. M&A deals in 1990. The drop mainly
reflects the firm’s advisory absence from two mega deals: AT&T
Inc’s $39 billion deal for T-Mobile USA and the $59
billion restructuring of insurer American International Group
Inc .

“The numbers are an example of the lumpiness of the
business, particularly when you get the mega-deals,” said
Michael Holland, chairman of New York-based money manager
Holland & Co.

Goldman Sachs, typically in the top three in these tables,
missed out on the T-Mobile USA deal because it was advising
Sprint Nextel Corp , a source familiar with the matter
previously told Reuters. Sprint also held talks to merge with

The drop in ranking comes after a torrid year for the firm,
with its reputation hit by a $550 million settlement over
charges it marketed a subprime mortgage product fraudulently.

Goldman, however, is advising on some companies that could
be sold in the coming months, which could boost rankings in
future quarters. It is advising Warner Music Group Corp
on a possible sale, a source previously told Reuters.

“It will ruffle some feathers, definitely, in this quarter,
but I’m sure, Goldman being Goldman, will find a way to make up
for it, for the rest of the year,” Teck Tjuan Yap, managing
director at Freeman Consulting Services, told Reuters Insider.

Freeman Consulting Services is an investment banking
consulting joint venture between Freeman and Thomson Reuters.

The quarterly data did little to Goldman’s market share over
the longer term. Goldman’s share of global worldwide M&A fees is
6.1 percent on a trailing four-quarter basis, up slightly from
5.8 percent from the previous 12 months, according to data
compiled by Reuters Insider.


Globally, Goldman ranked fourth, behind Morgan Stanley,
JPMorgan and Bank of America.

Observers said that it was hard to tell from one quarter’s
figures if Goldman’s M&A practice had been hurt by the firm’s
reputational damage over the past year.

Still, winning assignments has likely become harder for
them, said one former Goldman Sachs managing director, who spoke
on condition on anonymity.

“They are no longer the default choice because of the taint
around them — justified or unjustified — from the financial
crisis,” that person said.

Goldman has recently been criticized for its management of a
private offering by social networking company Facebook Inc. The
bank had to bar U.S. investors from the sought-after deal,
following a series of media reports.

A former Goldman director, Rajat Gupta, has also been
accused of leaking boardroom secrets to hedge fund manager Raj
Rajaratnam about a crucial investment by billionaire Warren
Buffett in Goldman during the financial crisis.

“If I were at Goldman Sachs, I’d be concerned that the bad
press the firm has received for the last two years will have
affected our reputation,” said Roy Smith, a professor of finance
at New York University’s Stern School of Business and a former
Goldman Sachs partner.

However, Smith noted that all it would take was two big
deals and Goldman could be back up at the top again. He said any
concerns about a reputational hit were likely overblown when it
comes to the M&A business.

Dealmakers at companies are “hard-boiled guys” who are more
concerned about getting the best advisor than anything else, he

“If you go to pension funds, governments, people in the
public eye with boards of trustees, the reputation factor tends
to carry over.”

Goldman Sachs declined comment on its position in the league
(Editing by Andre Grenon)

DEALS-UPDATE 1-Goldman slides to 10th spot in U.S. M&A ranks