Goldman Sachs building M&A dealmaking app as socialising dries up

New York

FOR work-from-home executives worried about losing their mergers and acquisition (M&A) mojo, fear not: Goldman Sachs has developed an app just for you.

The investment bank, synonymous with the schmooze-heavy world of M&As, plans to tap into the remote-working boom by offering clients technology to help them matchmake without having to hit the social circuit.

The technology is called Gemini and is already being used by Goldman's bankers. The firm plans to offer it to clients and hopes they will be able to use it to identify under-performing parts of their businesses that make them vulnerable to attacks by activist investors or those that score poorly on environmental, social and government issues.

David Dubner, Goldman's global head of M&A structuring, said he also expects clients to use the product to identify sale or spin-off opportunities and possible takeover targets in the form of unloved or poorly performing company divisions.

"Investors are going to continue to scrutinise companies with multiple business lines," he said. "The trend of corporate simplification, whether that's by selling or spinning assets pro-actively or having investors push companies to do it, is here to stay."

It works like this: The app breaks down how different divisions of companies perform relative to peers, showing how they can grow through mergers and partnerships. It also details which ones look ripe for disposal.

The app relies on a formula that compares revenue growth, profit margin and other metrics as a percentage of sales. It compares that across a wide peer set to provide a score at the individual segment level that can be used to assess relative performance.

The technology raises an obvious question: Does it have the potential to ultimately displace the traditional role of investment banker as matchmaker?

Mr Dubner said the firm is not concerned. "We have a long-term view that technology and big data are going to be core aspects of the M&A business," he said. BLOOMBERG