Goldman Sachs is a multinational finance company based in America that offers financial services including; investment banking, securities, investment management, asset management, mergers and acquisitions advice, securities underwriting etc.
The company is also a primary dealer in the US treasury market and is a market maker. Goldman Sachs owns GS bank which is its direct bank front in the USA.
The firm is well-known and has a long list of top government officials both in the United States and other countries as former employees.
Its former employees have also been heads of the World Bank, the New York Stock Exchange and some major banks including Citigroup.
Brief History of Goldman Sachs
Goldman Sachs was founded in 1869 by Marcus Goldman in New York. Over the years, Goldman Sachs has made numerous acquisitions and influenced/underwrote many IPOs notable among them are;
- The acquisition of J. Aron & Co. a commodities trading firm in 1981
- The underwriting of the IPO of Rockefeller center in 1985, which was then the largest offering in history.
- The underwriting of the IPO of Microsoft
- In 2000, Goldman Sachs bought Spear, Leeds & Kellogg for $6.3 billion giving the company a lead way in the New York Stock Exchange.
- During the 2007-2008 subprime mortgage crisis, Goldman Sachs made profit from the economic crisis leading to a lot of criticism, allegations of fraud and lawsuits.
The firm entered into a settlement costing about $550 million. Goldman Sachs was highly criticized for its actions during the crisis, the company received $12.9 billion for AIG’s counterparty payments from the money loaned to AIG by the federal government TARP funds.
Although Goldman denied any wrongdoing stating that their customers knew that the firm was betting against the mortgage-related securities it sold to them.
It was alleged that the company’s actions were unethical. Goldman Sachs has also been accused of stock price manipulation.
Various operations of Goldman Sachs
The company is subdivided into four main business units;
Investment banking: this unit of the company accounts for 21% of its total revenues. The firm’s operations under this unit include; Mergers and acquisitions, investitures, corporate management and other financial advisory roles.
Goldman is renowned for its advisory roles and has always topped charts in this segment especially in regards to the steady huge size of transactions the company does.
Investment management: the investment management unit of Goldman Sachs has a wide global reach. The unit provides investment advisory and other related financial planning services to its global customer base.
The job description of this unit includes; financing, custody, securities lending, clearing etc.
They offer these services to institutional clients like hedge funds, mutual funds, and pension funds operators. The unit accounts for 18% of the company’s total revenue.
Investing and lending: Goldman is well-known as a shrewd investment firm. Its investment and lending unit accounts for 16% of the company’s total revenue.
Goldman Sachs is also a big player in the capital market providing businesses with the needed capital in form of loans or other option.
Institutional client services: this is the firm’s biggest generator of revenues accounting for a whopping 45% of its total revenue. The unit is subdivided into 4 smaller segments;
- Fixed income option where trading on interest rate, credit products, mortgage-backed securities and derivative products are done.
- Then the Currency and commodities option where the company trades on various currencies and commodities
- Equity trading option includes trading on equities and its derivatives, options and future contracts etc.
- And finally, the principal investments option which includes merchant banking investments and funds.
In conclusion, Goldman Sachs is a well-established global financial institution. The company has had its share of crisis either with the government or its clients/investor but has always been known for its huge financial prowess.
If you are looking for a renowned financial institution to do business with, Goldman Sachs is amongst the best.