Goldman Sachs president says investor confidence has weighed on deal-making.
FORTUNE — Goldman Sachs believes that M&A and IPO volume is artificially low, driven down by soft investor confidence.
In a presentation given yesterday at the Bernstein Strategic Decisions Conference, Goldman Sachs (GS) president Gary Cohn showed that global M&A volume in 2013 only represents around 4% of global market cap, compared to a 20-year average that approaches 7%.
IPO volume came in at around 0.2% of global market cap, which is just half the 20-year average.
What does that mean in terms of dollars? Well, Cohn says that just closing half of the gap between current M&A volume and historical averages would mean around $700 billion in additional activity. On the IPO front, where U.S. issuance has begun to climb, the addition would be approximately $50 billion.
Cohn chalks most of this current discount to poor investor confidence due to macro-economic concerns, but also says that he expects confidence to improve. If he’s right, expect the recent IPO bump to continue and for M&A to follow suit.
Sign up for Dan’s daily email newsletter on deals and deal-makers: GetTermSheet.com