- Goldman Sachs has developed an app called Gemini to help clients find matches for mergers and acquisition.
- The app measures the performance of companies' specific units against those of their competitors by using a formula that compares revenue growth, profit margin and other metrics as a percentage of sales.
- The bank hopes clients will use it to pinpoint underperforming units, which activist investors may target, or segments that score poorly on environmental, social and governance issues. David Dubner, the company's global head of M&A structuring, told Bloomberg he also expects the app to identify sale or spin-off opportunities and possible takeover targets.
The coronavirus pandemic has severely curbed business travel — particularly for M&A. So a tool to help executives suss out potential partnerships could be helpful.
"Bankers are road warriors, but I think they're learning quickly that they can get a lot more done [remotely]," Derek Koecher, Verizon's vice president of strategy and development, said in June, according to Bloomberg. The telecom giant acquired BlueJeans, a videoconferencing software company, in April for $400 million. Negotiations began before COVID but ramped up as the virus did the same, he said.
"That time that you get with the management team — the dinners, the drop-bys, the 'Hey, I need to come out and see you, let's have breakfast' — were completely gone," he said. "One thing you worry about is culture. Are you going to have the right cultural fit with people you didn't spend a lot of face-to-face time with? We used the platform to get that management time and intimacy. It was an experiment, and it proved to be quite successful."
M&A volume globally is down 47% this year, Bloomberg reported. Although in the financial sector, the decrease is sharper. There were 270 bank and thrift deals announced in 2019, but 58 so far this year, according to S&P Global.
The desire among companies to combine or compete remains strong. However, Dubner said Goldman is not concerned the technology will supplant the human element to M&A matchmaking.
"Investors are going to continue to scrutinize companies with multiple business lines," he told Bloomberg. "The trend of corporate simplification, whether that's by selling or spinning assets proactively or having investors push companies to do it is here to stay."