, or simply '''Goldman Sachs''' () is one of the world's oldest and most prestigious ,
Chicago ,
Frankfurt ,
Paris ,
London ,
Hong Kong and
Tokyo .
Goldman is widely respected as a financial advisor to some of the most important companies, largest governments, and wealthiest families in the world. It is a
Primary Dealer in the U.S. Treasury securities market. Goldman offers its clients mergers & acquisitions advisory, provides underwriting services, engages in proprietary trading, invests in private equity deals, and also manages the wealth of affluent individuals and families.
- As of 2005, employed 22,425 people worldwide.
- Total Net revenues for FY 2005 were $24.782 billion
- Pre-tax earnings for the 2005 fiscal year ending November 30, 2005 were $8.273 billion.
- The CEO is Hank Paulson .
Goldman Sachs is divided into three core businesses (segments): Investment Banking, Trading and Principal Investments; and Asset Management and Securities Services.
is divided into two divisions and includes '''Financial Advisory''' (
Mergers And Acquisitions , investitures, corporate defense activities, restructurings and spin-offs) and '''Underwriting''' (public offerings and
Private Placements of
Equity , equity-related and debt instruments). Goldman Sachs is one of the leading investment banks, topping the
League Tables many times, especially in equity operations. In mergers and acquisitions, it gained fame historically by advising clients on how to avoid hostile takeovers. Goldman Sachs, for a long time during the 1980s, was the only major investment bank with a strict policy against helping to initiate a
Hostile Takeover , which increased Goldman's reputation immensely. This segment accounts for around 15 percent of Goldman Sach's revenues.
is the largest of the three core segments, and is the company's profit center. The segment is divided into three divisions and includes '''Fixed Income, Currency and Commodities''' (trading in
Interest Rate and
Credit products,
Mortgage-backed Securities and loans, currencies and commodities, structured and derivative products), '''Equities''' (trading in equities, equity-related products,
Equity Derivatives ,
Structured Products and executing client trades in equities,
Options , and
Futures Contract s on world markets), and '''Principal Investments''' (merchant banking investments and funds). This segment consists of the revenues and profit gained from the Bank's trading activities, both on behalf of its clients (known as flow trading) and for its own account (known as
Proprietary Trading ).
Most trading done by Goldman is not speculative, but rather an attempt to profit from bid-ask spreads in the process of acting as a
Market Maker . Around 65 percent of Goldman's revenues and profits are derived from this area. Upon its IPO, Goldman predicted that this segment would not grow as fast as its Investment Banking division and would be responsible for a shrinking proportion of earnings. The opposite has been true, however, and resulted in
Lloyd Blankfein 's appointment to President and Chief Operating Officer after
John Thain 's departure to run the
NYSE and
John L. Thornton 's departure for an academic position in China.
is a rapidly growing business for Goldman as it gains market share. It is divided into two divisions, and includes '''Asset Management''' which provides large institutions and very wealthy individuals with investment advisory, financial planning services, and the management of
Mutual Fund s, as well as the so-called alternative investments (
Hedge Fund s,
Funds Of Funds , real estate funds, and
Private Equity Fund s). The '''Securities Services''' division provides
Prime Brokerage , financing services, and securities lending to mutual funds, hedge funds, pension funds, foundations, and high-net-worth individuals. This segment accounts for around 19 percent of Goldman's earnings.
From its humble beginnings in 1869, when
Marcus Goldman , a Jewish German immigrant, founded the firm, to its current status as one of the most respected financial institutions in the world, Goldman Sachs has undergone a fascinating journey. A brief history of Goldman follows:
- Pioneered use of commercial paper for entrepreneurs.
- Samuel Sachs, Marcus Goldman's son-in-law, joins the firm as a partner.
- Joins NYSE as a member in 1896.
- Plays lead role in establishing IPO market.
- Popularizes use of P/E ratios and audited financials for evaluating industrial stocks.
- Samuel Sachs assumes role of Senior Partner in 1904.
- Lead-manages the IPO of Sears, Roebuck in 1906.
- Becomes one of the first on Wall Street to actively recruit MBAs.
- Following the crash of the stock market, Goldman almost collapses due to the large trading risks it assumed in the late 1920's.
- Sidney Weinberg assumes role of Senior Partner in 1930, and shifts Goldman's focus away from taking on trading risk, and towards servicing corporate clients. In the process, he establishes relationships with some of America's largest companies.
- Takes a lead in proposing banking reform and corporate governance improvements.
- Founds Investment Research division in 1933.
- Creates municipal bond department in 1934.
- Becomes an early innovator in the field of risk arbitrage.
- Under the guidance of Gus Levy , Goldman becomes a leader in creating the technique of block trading, an innovative trading technique whereby large blocks of securities are bought and sold simultaneously. As a result of this innovation, Levy quickly becomes one of the leading revenue-generators at Goldman.
- Establishes its Investment Banking Division (IBD) in 1956.
- Becomes the first investment bank to focus on the institutional sales market, creating Institutional Sales division in 1956.
- Manages Ford Motor Company 's IPO in 1956, at the time the largest public offering in history.
- Due to its reliance on the deal-making ability of Weinberg, Goldman seeks to diversify the sources of its investment banking revenue. In the process, it becomes the first investment bank to establish a business development group for its corporate advisory activities.
- Becomes the first investment bank to establish a dedicated M&A group in 1963.
- Gus Levy assumes role of Senior Partner in 1969, and builds Goldman's trading franchise. A trader by background, Levy is famous for coining the adage, "Something well bought is half sold", and the philosophy of being "long-term greedy".
- Consummates the first negotiated trade on NYSE.
- Is first to offer U.S. commercial paper for a Japanese company.
- Opens its first international office in London in 1970.
- Creates Private Wealth and Fixed Income divisions in 1972.
- Develops a "White Knight" strategy to defend Electric Storage Battery against a hostile bid from International Nickel in 1974. After successfully fending off the takeover attempt, Goldman publicly states its refusal to represent a hostile bidder due to the fact that this might create client conflicts. Subsequently, Goldman earns the trust of companies that are being pursued by financial or strategic buyers, and gains notoriety as a sell-side advisor.
- John Weinberg and John Whitehead assume roles of Co-Senior Partners in 1976, and codify Goldman's values in its Business Principles. Chief among these principles is that of teamwork, and Whitehead gains fame for oft repeating the phrase, "At Goldman Sachs we never say I."
- Becomes a leader in facilitating global privatization movement, by advising the companies that are being spun off from their parent governments.
- Facilitates one of first registered high-yield bonds for IPOs.
- John Weinberg becomes sole Senior Partner in 1984.
- Joins London and Tokyo stock exchanges in 1986.
- Forms Goldman Sachs Asset Management in 1986.
- Becomes first U.S. bank to rank among top 10 in UK M&A league tables in 1986.
- Manages the IPO of Microsoft in 1986.
- Advises GE on its acquisition of RCA in 1986.
- Creates first public offering of original issue deep-discount bond.
- Becomes first investment bank to distribute research electronically.
- Robert Rubin and Stephen Friedman assume roles of Co-Senior Partners in 1990, where they focus on globalizing the firm and building its strength in M&A and Trading.
- Introduces paperless trading on NYSE.
- Publishes Black-Litterman Asset Allocation Model.
- Lead-manages first-ever global debt offering by a U.S. corporation.
- Launches Goldman Sachs Commodity Index (GSCI).
- Friedman becomes sole Senior Partner in 1992 after Rubin leaves to join President Clinton 's Cabinet.
- Opens Beijing office in 1994.
- Jon Corzine becomes Senior Partner in 1994, where he focuses on reinforcing Goldman's focus on teamwork and community involvement.
- Manages the IPO of Yahoo! in 1996.
- Acts as global coordinator for the IPO of NTT DoCoMo in 1998.
- Becomes publicly traded via its IPO in 1999.
- Coordinates the landmark sale of LTCB (now Shinsei Bank ) to Ripplewood Holdings .
- Arranges first electronic offering for the World Bank.
- Advises landmark debt offering for Government of China.
- Acts as financial advisor for largest ever merger between biotech firms.
A number of alums of Goldman Sachs have gone on to hold prominent positions in both politics and in other for-profit and non-profit organizations. A sampling of alums includes:
- Joshua Bolten , current White House Chief Of Staff
- Jon Corzine , Governor Of New Jersey
- Stephen Friedman , former Chairman of George W. Bush 's National Economic Council
- Robert Rubin , United States Secretary Of The Treasury under Bill Clinton
- Jack Ryan (Senate Candidate) , former candidate for United States Senate in Illinois
- John Whitehead , former Deputy Secretary of State, and Chairman of the Lower Manhattan Development Corporation.
- E. Gerald Corrigan, former President and CEO, Federal Reserve Bank Of New York
- Kenneth D. Brody, former President and Chairman, Export-Import Bank Of The United States
- Edward S Lampert , Founder of ESL Investments and member of the Forbes 400 list.
- Eric Mindich founder of Eton Park hedge fund.
- Ed Mule , Founder of multi-billion dollar hedge fund Silverpoint.
- Pete Briger , Co-Head of Fortress Investment Group, which bought $260m in loans to Michael Jackson from Bank of America in late 2005.
- J Christopher Flowers , Founder of J.C. Flowers & Company and member of the Forbes 400 list.
- Jim Cramer , CNBC's Mad Money host, director of TheStreet.com and host of the radio show Real Money with Jim Cramer syndicated by Westwood One/CBS Radio.
Goldman was listed as the 6th Best Large Company to Work For, and the 26th Best Overall Company to Work For in
Fortune Magazine 's 2006 rankings.
In addition, Goldman Sachs received a 100% rating on the
Corporate Equality Index released by the
Human Rights Campaign starting in
2004 , the third year of the report. In addition, the company was named one of the
100 Best Companies For Working Mothers in
2004 by
Working Mothers Magazine .
''Goldman Sachs: The Culture of Success''. Lisa Endlich. Little, Brown and Company. 1999. ISBN 0316643734
- http://www.ftknowledge.com/solutions/artcl_barber_print.html
