Goldman Sachs CEO David Solomon is predicting the long-awaited return of M&A

What’s on deck:

But first, let’s make a deal.

If this was forwarded to you, sign up here.

The big story

Back to the negotiation table

The M&A drought that’s kept investment bankers on the sidelines is on its last legs, according to Wall Street’s top dealmaker.

Goldman Sachs’ CEO David Solomon offered an optimistic view on the dealmaking landscape during the bank’s second-quarter earnings calls on Monday, writes Business Insider’s Reed Alexander.

Solomon said the bank is seeing a “backlog” of transactions, calling it the “early innings” of a turnaround for a sector that’s been all but dead over the past few years.

If anyone would know about M&A’s return, it’s Goldman Sachs. The bank traditionally sits atop league tables ranking advisors of deals. Reed previously spoke to a dozen insiders about how Goldman bankers are raring to go after a tumultuous few years for the firm.

But even if Solomon’s prediction is self-serving, that doesn’t make it wrong. The bank’s underwriting revenue rose 39% last quarter thanks to more leveraged finance. Translation: Private-equity firms, whose inactivity has been a big piece of the M&A slowdown, are borrowing cash in preparation to cut deals.

An M&A return isn’t just good for bankers. The lack of deals has been a massive dam to the flow of the broader economy.

When dealmaking comes back, founders and early employees of startups can cash out and move on to fresh projects. Larger companies can make acquisitions that help them push into new areas.

The return of deals is one thing. Getting them done is something else entirely.

The last time M&A came back in a big way after a downturn was in the aftermath of the pandemic. By early 2021, junior bankers were burnt out from the onslaught of deals they were working on.

Goldman sat at the center of it. Some of the bank’s young employees made presentations — How else do you expect a banker to communicate? — outlining their complaints to senior management, which eventually leaked and went viral.

A September rate cut and switch to a deal-friendly White House in November are near-term sparks that would set the industry off and running quickly again.

But the untimely death of a Bank of America investment banker in early May put Wall Street’s working conditions back in the spotlight. So this time around, banks might look to AI for help.

Solomon said on Monday’s call he sees AI helping “the factory of the business” by prepping info for clients.

That’s the type of work that often falls to junior bankers. Analysts are responsible for building out presentations ahead of client meetings, during which more senior bankers lead.

While junior bankers might appreciate some help, it could ultimately spell trouble for them. The more work banks can farm out to generative AI, the less need they’ll eventually have for them altogether.

3 things in markets

1. The “Trump trade” is in full swing. The failed assassination attempt of the former president is impacting the market, as investors reposition their portfolios for Donald Trump’s potential return to the White House. In the short-term, one asset is thriving: bitcoin.
2. Why investors should be going for the gold, literally. George Milling-Stanley, State Street’s chief gold strategist, believes the precious metal’s price could rise more than 10% before year-end, reaching $2,700 per ounce. He made his case for why future rate cuts and geopolitical tension will be beneficial for gold.
3. Coatue’s founder on the art of “buying high and selling low.” French billionaire Philippe Laffont said at a recent conference there is no shame in investing in stocks that are already up big. It’s why he sees no problem with the astronomical rise of some big semiconductor companies’ stock prices. “If there is a bubble, it’s not a valuation bubble,” Laffont said.

3 things in tech

1. For Gen Z jobseekers, tech’s vibes have gone rancid. Tech is losing its luster among high-achieving high schoolers. Promising young Gen Zers are turned off by the industry’s ethical problems and non-commitments — and they see one surprising sector as a viable alternative.
2. Laid-off DEI chief blasts Microsoft for reneging ethical commitment. After Microsoft gutted an entire diversity, equity, and inclusion team, the team’s leader skewered the company in an internal email sent to thousands of employees. The leader accused the giant of failing to invest in DEI and backsliding on its 2020 commitments.
3. A big potential acquisition for Google could lead to a regulatory showdown. The tech giant is eyeing a $23 billion deal to acquire the cybersecurity startup Wiz. If approved, it would be the company’s biggest acquisition ever. Here’s why Google’s willing to risk the wrath of the FTC to do it.

3 things in business

1. A key shift in strategy (thanks to some coaching) revolutionized a private-equity firm. Alpine Investors, the firm behind a prestigious CEO-in-training program, struggled until it started working with executive coaches. The result was a new focus on talent that launched the firm to new heights.
2. What’s Vivek doing with BuzzFeed? Vivek Ramaswamy spent millions snapping up the media company’s shares in what seemed like a takeover attempt. But one of the deadlines he set has come and gone with no change whatsoever, which leaves us wondering: Now what?
3. BlackRock CEO says the answer to the US’ debt problem is deregulation. In a CNBC appearance, Larry Fink said growth led by the private sector is essential to escape the rising national deficit. But that can only be achieved if businesses aren’t restrained by overregulation, said Fink, who also argued against tax cuts and tax raises

In other news

What’s happening today

• It’s Amazon Prime Day.
• Morgan Stanley, Bank of America, UnitedHealth and other companies report earnings.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. Annie Smith, associate producer, in London. Amanda Yen, fellow, in New York.