Oppenheimer Downgrades Goldman, Says M&A Rebound ‘Delayed or Cancelled’

Key Takeaways

• The mergers & acquisitions bounce investors expected after President Donald Trump’s return to the White House and hopes for light-touch regulation haven't happened, and one brokerage firm Wednesday downgraded its rating on Wall Street giant Goldman Sachs.
• Oppenheimer analysts called the M&A rebound “delayed or cancelled."
• Oppenheimer also downgraded its ratings to "perform" from "outperform" for two other financial firms whose fortunes hinge on busy Wall Street activity: private equity titan Carlyle Group, and Jefferies Financial Group.

The M&A bounce investors expected after U.S. President Donald Trump’s return to the White House and hopes for light-touch regulation haven’t happened, and one brokerage firm on Wednesday downgraded its rating on Wall Street giant Goldman Sachs (GS).

Oppenheimer analysts called the expected M&A rebound “delayed or cancelled” and downgraded their ratings to “perform” from “outperform” for three financial firms whose fortunes hinge on busy Wall Street activity: Goldman, private equity titan Carlyle Group (CG), and Jefferies Financial Group (JEF). 

“Coming into this year, we were very optimistic about a major rebound in M&A activity, and its attendant financing activity,” the analysts wrote in a note.

“There is, however, thus far no visible sign of this M&A rebound,” they added, noting that so far this year, deal volume is just 2.4% higher than it was last year, while equity capital markets volumes—which show fundraisings from initial public offerings (IPOs) and other share sales—have gained only 2.7%.

M&A Activity Set for Halt Amid Tariffs, Oppenheimer Says

The Oppenheimer analysts were also downbeat on the outlook for M&A picking up anytime soon. “We fear that the current uncertainty over tariffs, a fiscal ‘detox’ and the general upheaval of 80 years of trade and security arrangements is likely to cause a pause in M&A activity,” they wrote.

Since he won the White House in 2017, Trump has announced a series of tariffs on and off against the U.S.’s major trading partner, with some already imposing retaliatory measures.

Bankers predicted that a Trump administration would bring more deals, citing less regulation, lower rates of interest, and high stock market valuations as factors that could spur deal activity. “There was pent-up demand as 2023 and 2024 were all relatively moribund years with M&A volumes roughly on par with those a decade earlier,” Oppenheimer said.

Goldman and Jefferies’ shares rose in intraday trading on Wednesday, while Carlyle’s shares were up about 2.5%.