The Goldman Sachs Group, Inc.
“Goal is to assist clients with the tools and services needed to decrease administrative burdens of managing money to allow them to focus on increasing trading performance, building their business and attracting new sources of capital – Mission Statement” Marcin Ferenc, Victoria O’Connor, Lisa Brill, Tom Iadanza, Jay Lee, Michael Quijano, Anthony Sorrentino
Founded in 1869, been providing investment banking, securities, and investment management services to corporations, government, and high-net-worth individuals worldwide operates in about 25 different countries and the United States. Investment Banking, Trading and Principal Investments, and Asset Management and Securities Services. The main headquarters for the company are located in New York, New York.
Company $ Size
In 2006, earned $9.54 Billion within the United States Earnings per share were $19.69 Total Compensation per employee was $622,000 13% of revenues came from investing on its own behalf Goldman Sachs had total revenue of $37.7 billion $9.54 billion as its total profit
Revenues (millions) for Year
2007 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year 22,280 20,351 2006 17,246 18,002 15,979 18,126 69,353 2005 9,964 8,949 12,333 12,145 43,391 2004 7,905 7,676 6,803 7,455 29,839
Earnings per share ($) for Year
2008 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter E5.19 E4.98 E4.45 E5.87 2007 6.67 4.93 E6.13 E5.41 2006 5.08 4.78 3.26 6.59 2005 2.94 1.71 3.25 3.35
Employees and Revenue
Goldman Sachs employed 26,500 people
New York division maintains 13,000 employees
Investment Banking makes up for $5.6 billion in revenues Trading and Investing portion produces $25.6 billion revenues Asset Management acquires $6.5 billion in revenues
Organizes transactions for corporations, financial institutions, and governments
-mergers, acquisitions, divestitures, the issuance of equity or debt capital, or a combination of these
global relationships combined with its understanding of local economies, industries and cultures help to assist with elite advice and service consistently
Trading and Principal Investment
speeds up customer transactions and takes aptness positions through market making, trading of fixed income and equity products, currencies, commodities and swaps and other derivatives Fixed Income, Currency and Commodities, Equities and Principal Investments
The Trading and Principal Investments activities:
Deals with the investment necessities of institutions, governments and government agencies globally A strong understanding in local economies, industries and cultures facilitates a global relationship which assists in assuring customers of their wants; being access to investment opportunities, consistent, risk-adjusted performance, and solid and consistent returns Resources and Relationship and In-Depth Research Resources and Relationships have offices in the United States, London and Tokyo where they offer access to portfolio management teams onsite and globally In-Depth Research has a stronghold on research stems through cautious gathering of information and perspectives which facilitates knowledgeable decision making and objective of solid, consistent returns
Securities services include Global Securities Services which is a group pertaining to Prime Brokerage, Securities Lending, Futures Services and Financing Services with a varying and global client base Securities services include Global Securities Services which is a group pertaining to Prime Brokerage, Securities Lending, Futures Services and Financing Services with a varying and global client base. Goldman Sachs also offers a Prime Brokerage product The Goldman Sachs Securities Lending programs give clients an opportunity to create incremental revenues through low risk and well-understood transactions
Fixed Income, Currency and Commodities makes markets in and trades interest rate and credit products, currencies and commodities, structures and works with a wide range of derivative transactions and proprietary trading main products are commodities and commodity derivatives, credit products which include investment-grade corporate securities, high-yield securities, bank loans, municipal securities, credit derivatives, emerging market debt, currencies and currency derivatives, interest rate products, money market instruments and mortgage-backed securities and loans deals with equities which makes markets in, acts as a specialist for and trades equities, it arranges and deals with equity derivative transactions and works in proprietary trading
Risk Management Division which primarily delivers favorable returns compared to the market Goldman Sachs client base looks to risk management to create performance dependable with their forbearance to risk The company provides clients with mutual funds and asset management products in addition to specialized services for their institutional investors Goldman Sachs looks to provide clients with global capabilities, flexible technology solutions and easy access to information.
Goldman Sachs International Cogentrix Energy GS Capital Partners Goldman Sachs (Asia) Finance Goldman Sachs (Japan) Ltd. Goldman Sachs Canada Inc. Goldman Sachs Foreign Exchange (Singapore) Pte. Goldman Sachs (UK) L.L.C Goldman Sachs Bank USA Goldman Sachs Foreign Exchange (Singapore) Pte. Goldman Sachs L.L.C GS Equity Markets, L.P. GS European Performance Fund Limited GSCP (DEL) Inc. GSGF Investments Inc. The Goldman Sachs Group, Inc. The Hull Group, L.L.C Sargasso Limited Menhetia Inc.
Composed of two segments:
investment management investment banking and brokerage
provides different services to clients serve the purpose of bringing savers and borrowers together By pooling the savings of individuals, they increase liquidity, improve diversification, and reduce transaction costs for investors
Major reporting segments:
national full-line firms large investment banks regionals New York City based brokers discount and online brokers
Competitors Goldman Sachs Citigroup Morgan Stanley JPMorgan Merrill Lynch Percentage (%) of the Market Share 28.6% 27.2% 25.7% 23.4% 19.7%
Global investment banks U.S based investment Goldman Sachs banks hold top six Citigroup places in the global Morgan Stanley competitions JPMorgan Chase
Merrill Lynch Europe’s Credit Suisse UBS AG Deutsche Bank
Advances in technology
lowered transaction costs raised the market operating efficiencies
Client demand for specialized investment products
new financial product innovations:
new hedging vehicles, derivative products, and specialized mutual funds.
State of the art computers
do work that humans used to do speeds up market response and transaction time
hire more employees when market is doing well cut back on employment when market is declining. Industry health:
employed 803,700 (up 1.7% from 2005)
Investment Banking, Asset Management, Trading
Trading is largest of the three core segments, and is company's biggest profit center
Fixed Income, trading in interest rate and credit products, mortgage-backed securities and loans, Equities like trading in equities and equity-related products and executing client trades in equities, and Principal Investments like merchant banking investments and funds.
Investment Banking Segments
Financial Advisory and public offerings and private placements of equity, equity-related and debt instruments. Leading investment banks in its market Mergers and acquisitions
avoid hostile takeovers this segment accounts for around 15 percent of Goldman Sachs' revenues
Rapidly growing business as it gains market share Asset Management,
provides large institutions and very wealthy individuals with investment advisory, and the management of mutual funds.
The Securities Services
provides prime brokerage, financing services, and securities lending to mutual funds, hedge funds, pension funds, and foundations. accounts for around 19%
sales, trading, and merger advisory businesses remain strong despite increased market volatility
Sales and Trading:
generate most of industry’s revenues
FICC generated net revenues of $4.6 billion Equity trading revenues increased 35% Trading commissions increased 10%.
2006 and 2007, investment banks had a boost in their advisory businesses
record numbers of global mergers and acquisitions surge in leveraged buyout activity
Year Announced Deals Percent (%) Increase
$3.8 trillion $1.1 trillion (1st quarter)
Private equity firms
$11 billion in fees to Wall Street investment banks
merger boom increased:
-advisory fees -debt lending -underwriting fees
U.S and European investment banks compete for business around the world Expand into markets to increase growth or competitiveness, and satisfy demand Investors are looking to invest globally to enhance return and reduce risk Markets are opening in developing countries allowing investment services companies to serve their increasingly wealthy populations.
U.S and European investment banks are expanding to China
rapidly growing Chinese market
joint venture investment banking company, Goldman Sachs Gao Hua Securities hold a one third stake which is the maximum allowed lent $100 million to Fang Fenglei, a Chinese dealmaker who set up Gao Hua
www.GS.com www.spiegel.de/international Galenet.galegroup.com Standard and Poor’s Net Advantage Hoover’s Company Records Business & Company Resource Center Finance.yahoo.com en.wikipedia.org