Goldman Sachs and JPMorgan are expected to haul in a merged $133 million in expenditure banking expenses for advising Twitter on the company’s sale to Elon Musk.
But the bulk of that dollars will only come if the deal closes — a probability in concern as Musk threatens he won’t stick to through with the $44 billion acquisition.
Goldman Sachs nabbed $15 million upfront and will haul in $80 million if the offer closes, according to a securities submitting Tuesday. JPMorgan acquired $5 million for preliminary perform advising the board but will only receive $53 million if the deal closes.
And the certainty of the $44 billion Elon Musk Twitter offer is in concern soon after Musk tweeted he will not shut the Twitter deal until the enterprise can confirm to him that fewer than 5% of people are bots.
In a tweet Tuesday, Musk claimed his offer “was primarily based on Twitter’s SEC filings remaining accurate” and he needs evidence to move ahead.
But Musk’s legal footing for backing out of the deal is shaky, filings suggest. According to securities filings, Twitter can force Musk to consummate the deal even if he waffles.
And the expected payout comes as banks are seeing an otherwise massive fall-off in investment banking fees as the economy slows and deal-making activity wanes.
Goldman, which typically generates a third of its revenue from its investment bank through lucrative fees from advising on deals, brought in $2.41 billion in fees in the first quarter of 2022 — 36% lower than the first quarter from the year before. Overall profits were down 42% in the first quarter.
At JPMorgan, profit was also down 42% in the first quarter. And investment banking fees, which have buoyed revenue over the last few years, were down 31% — with overall investment banking profit slumping 26%
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