Goldman Sachs Overview: Goldman Sachs is a major integrated financial services firm. Its lines of business include:
- Wealth Management (Retail Financial Advisory Services)
- Asset Management
- Investment Banking
- Lending
- Securities Trading
- Securities Research
On September 21, 2008 Goldman Sachs successfully applied to become a bank holding company. This subjects the firm to increased federal regulation and will reduce profit-making opportunities in the future. On the other hand, the move is designed to increase investor, creditor and client confidence in Goldman Sachs, largely by giving it ongoing access to emergency funding from the Federal Reserve's discount window.
Size: Goldman Sachs reports the following figures as of May 31, 2008, except as noted (Goldman Sachs has a fiscal year ending November 30):
- Employees = 31,495
- Assets Under Management = $895 billion
- Net Revenues = $46.0 billion (full year 2007)
- Operations in 29 Countries
Positives: Goldman Sachs has, for many decades, been by consensus the most respected name on Wall Street. It may have lost a bit of a cachet since it converted from a partnership to a public firm in 1995, but not much. Loyalties to the firm remain high, as witnessed by the alumni section on its website. Admission into its internship programs is highly coveted.
Goldman Sachs has a private wealth management division, which is its financial advisory business. This division serves only high net worth individuals (though the website does not disclose the minimum wealth necessary), and offers private banking, trust company services and financial counseling. The 2003 acquisition of Ayco is the cornerstone of the latter service, which is another term for financial planning. Goldman Sachs also offers family office services.
Goldman Sachs has remained solidly profitable through fiscal 2007 and the first half of fiscal 2008, avoiding the worst of the subprime mortgage and credit crises. Employment growth remains strong: up nearly 1,000 (3%) in the first half of fiscal 2008, and up over 11,000 (54%) since 2003.
Through his Berkshire Hathaway investment company, legendary money manager Warren Buffett took a $5 billion stake in Goldman Sachs preferred stock. Taken in September, 2008 during the height of the market crisis, this was a major vote of confidence in Goldman Sachs.
Goldman Sachs also will receive a $10 billion equity infusion from the Treasury Department as part of the $700 billion financial rescue package. This also will soldify Goldman's financial position.
Negatives: Since becoming a public company, Goldman Sachs has exploded in size. The character of the firm thus appears to have changed, with old days of a tightly-knit Goldman family long gone. The old culture was not likely to remain completely intact through such a radical resizing. Just a few decades ago, for example, total employment at Goldman Sachs was only around 1,000.
