NEW YORK (CNNMoney.com) -- Goldman Sachs' focus on its profitable private equity business is spurring a wave of copycats among investment brokerage firms on Wall Street, according to The New York Times.

Private equity has become the golden practice for Goldman Sachs (Charts), accounting for about 8 percent of the company's pretax earnings. Experts said the business - which involves a firm investing directly in another company and then selling for a profit while inviting select clients to participate in the transaction - has become the fad du jour among competitors.

Merrill Lynch (Charts), for instance, said last week that private-equity profits bolstered its second-quarter earnings. The company highlighted its new-found focus on the area by participating in the $31.6 billion buyout of hospital chain HCA earlier this week. HCA is the biggest private-equity deal on record.

And competitor Morgan Stanley (Charts), under the new leadership of chief executive John Mack, is aggressively trying to rebuild the private-equity business the company recently spun off, the Times reported.

While Goldman Sachs is showing no signs of slowing down its growth in the private-equity business - the firm already manages more than $20 billion in private equity funds and is in the process of raising capital for a thirteen fund that could raise more than $15 billion - there are concerns on Wall Street that the company faces conflicts of interest between its clients and its own bankers.

The Times said the company is playing a fine balancing act between making money through private-equity deals and providing fee-based services to big private-equity firms that are clients.

In a recent buyout of Kinder Morgan by a group of investors including Goldman Sachs, the company also served as a principal investor and an adviser on the deal - a move that allowed the company to book profits from investing, advising and financing debt.

Still, Sanford C. Bernstein analyst Brad Hintz told the Times that Goldman is managing "to walk this thin very thin line between investment banking and merchant banking" and added that if competitors are jumping on the bandwagon, the company's business model is proving to be right.

According to a report by Hintz, Goldman's private equity business earned $679 million in pretax profit last year.

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