GOLDMAN SACHS GOES PUBLIC
Wesley W. Marple, Jr., Northeastern University
The Goldman Sachs Group case provides business students with an overview of the activities of a premier investment-banking firm at the end of the twentieth century. The case was written entirely from publicly available materials. To challenge students to make a decision, the case was written from the point of view of a hypothetical potential investor. For comparative purposes, strategic and operating information and stock price data are provided about major competitors.
The case requires students to consider the make-up of the investment banking industry, its major players, and its possible future direction. Students will also examine the competitive position of Goldman Sachs and its competitive strengths in its various lines of business. The date of the case is about a month after the Goldman Initial Public Offering on May 4, 1999.
The case was written to introduce graduate students in an investment-banking course to the activities of investment banking firms. It could also be used in corporate financial management or investments courses.
Goldman Sachs was one of the most successful U.S. investment banking firms in a world-wide business dominated by U.S. companies. Goldman was broadly diversified in traditional investment banking, trading and principal activities and asset management and securities services. From humble beginnings the firm grew to top positions in the investment banking “league tables.” These tables rank firms by volume of transactions in various sectors of the investment banking business.
Before its IPO, the firm was unique among major investment banks in being organized as a partnership instead of a corporation for most of its 138 years. Peers had incorporated earlier to secure added equity capital and publicly traded common stock that could be used as currency in acquisitions. Issuing common equity also provided Goldman with the opportunity to reward all employees with an ownership stake in the business and partners with the potential of a large, one-time capital gain.
This case was prepared by Wesley W. Marple, Jr., Northeastern University, and is intended to be used for class discussion rather that to illustrate either effective or ineffective handling of the situation.
Presented to and accepted by the North American Case Research Association (NACRA) for its annual meeting, November 2003, Tampa, Florida. All rights reserved to the author and NACRA. © 2003 by Wesley W. Marple, Jr.