Goldman Sachs and JPMorgan are expected to haul in a combined $133 million in investment banking fees for advising Twitter on the company’s sale to Elon Musk.
But the bulk of that cash will only come if the deal closes — a likelihood in question as Musk threatens he won’t follow through with the $44 billion acquisition.
Goldman Sachs nabbed $15 million upfront and will haul in $80 million if the deal closes, according to a securities filing Tuesday. JPMorgan received $5 million for initial work advising the board but will only receive $53 million if the deal closes.
And the certainty of the $44 billion Elon Musk Twitter deal is in question after Musk tweeted he won’t close the Twitter deal unless the company can prove to him that less than 5% of users are bots.
In a tweet Tuesday, Musk said his offer “was based on Twitter’s SEC filings being accurate” and he needs proof to move forward.
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%