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. Last Updated: 07/27/2016

Goldman Sachs Learns Talk Actually Is Cheap

LONDON / NEW YORK -- In the world of mergers and acquisitions, where strategic advice is increasingly another commodity to go with corporate loans, Goldman Sachs isn't getting the respect it used to.

While New York-based Goldman remains No. 1 in M&A during a record year for takeovers, the perennial leader since 2001 is getting paid less for its advice. Fees totaling 0.31 percent of the $802 billion in transactions Goldman helped arrange during the past four quarters are down from 0.37 percent for the previous 12 months, according to company reports and data compiled by Bloomberg.

Goldman's lost cachet is reflected in the growing use of multiple advisers. More than seven firms, on average, got hired in each of this year's 10 biggest acquisitions, up from fewer than five last year and about six in 2002, the previous high, according to Bloomberg data. Goldman, the second-largest securities firm by market value, now shares the revenue and credit on about 50 percent of the takeovers it arranges, compared with less than 33 percent in 2001.

The time when hiring Goldman Sachs was "like hiring a surgeon" because "M&A was mysterious" may be gone, says Brad Hintz, the securities industry analyst at New York's Sanford C. Bernstein and former treasurer of Morgan Stanley and chief financial officer of Lehman Brothers Holdings.

Goldman spokesman Peter Rose declined to comment.

As recently as three years ago, Goldman was the only firm to work on more than 20 percent of all mergers, as measured by the value of the companies being acquired. Now there are six: Goldman, Citigroup, JPMorgan Chase, Morgan Stanley, Merrill Lynch and UBS. All are based in New York except for UBS, Europe's biggest bank by assets, which has its headquarters in Zurich.

"The commercial banks have used their ability to provide loans to either be an actual adviser or at a minimum get M&A credit for the deals," said David Baum, 41, a former head of U.S. mergers and acquisitions at Goldman.

Companies are now assembling armies of bankers to finance takeovers, block rival bids and get regulators and investors to back their deals. The safety in numbers convinced Barcelona-based Abertis Infraestructuras, for example, to hire five firms when it made a $30 billion offer for Rome-based Autostrade, because the Italian highway company had nine, including Goldman.