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Goldman going to the market
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June 15, 1998: 10:37 a.m. ET
Goldman Sachs chiefs vote to launch IPO, ending 129 years as partnership
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NEW YORK (CNNfn) - The top-tier investment bank Goldman Sachs Group L.P. said Monday it will end its 129-year run as a partnership and launch an initial public offering to better compete with publicly traded rivals.
In a unanimous, closely guarded vote, Goldman's six-person executive committee agreed Sunday night to the once-unthinkable: its own coming-out party on the Wall Street to which it has escorted thousands of companies.
The vote culminated a weekend meeting of Goldman's 190 partners to mull, for what was at least the sixth time in the past three decades, whether to open up for public shareholders.
Shares of Goldman could first be offered on Wall Street as early as this fall, after details are hammered out and a vote among the partners. Between 10 and 15 percent of its common equity will be offered.
"As a public company, Goldman Sachs will have the financial strength and strategic flexibility to continue to serve our clients effectively as well as to respond thoughtfully to the business and competitive environment over the long term," Jon Corzine and Henry Paulson, Jr., co-chairmen and co-chief executive officers of the firm, said Monday.
Financial sector experts said the timing is as good as any for Goldman, which just wrapped up two of its best years ever and tallied at least $1 billion in profits in each of its last two quarters.
Meanwhile, the financial sector has been in wide consolidation, topped by the $70 billion merger of CitiCorp and Travelers Group Inc., which is the parent of a key Goldman rival. By going public, Goldman will significantly boost its liquidity and help accelerate growth and expansion.
"This action also will meet a fundamental objective of the partners -- to share ownership benefits and responsibilities more broadly among all of the firm's employees," Corzine and Paulson said.
Indeed, Goldman partners could score a windfall, collecting as much as $175 million in shares in the IPO. But market experts said that was less of a concern for Goldman chiefs than boosting their competitive edge.
"The logic behind Goldman Sachs going public today is not so much to create liquidity for the partners in terms of their ownership interests," said Gary Goldstein, president of the Whitney Group, an executive search firm.
"It's really to create a currency that they can use for acquisitions. Goldman is looking at a number of strategic ways for them to expand into different product areas," Goldstein said.
Founded as a partnership in 1869, Goldman Sachs is widely considered to be a crown jewel among Wall Street firms and the last of its ilk to go public.
Goldman Sachs had a hand in several of the nation's highest-profile deals recently, such as the $38 billion merger of Chrysler Corp. and Germany's Daimler-Benz AG.
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Goldman Sachs
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