Watch out for the friendly, neighborhood Goldman banker.
Fresh off a quarter in which Goldman Sachs Group Inc. raked in more fees from dealmaking than any rival, a new slate of managers say they’re looking to expand that lead by ratcheting up a campaign to deepen ties with companies valued at less than $2 billion. Executives talked up the effort on a conference call last month, indicating they will dedicate more bankers to it. They’re also getting ready to roll out more products.
Goldman bankers began fanning out across the U.S. two years ago to pitch companies once deemed too small to warrant regular attention. They’re now setting up a dedicated team. It’s a dramatic cultural shift for a firm whose elite bankers long prided themselves on chasing the most lucrative deals. Now, they just have to overcome all of the skepticism.
“I was intrigued to understand why they were reaching out,” Chris Fraser, the former head of a Texas-based chemicals company said of an unsolicited email from a Goldman banker a couple of years ago, as its push began. “I even asked the question, ‘Don’t you have more important or bigger potential clients to spend time with?”’
Fraser eventually struck up a dialogue and hired the bank for a secondary stock offering in 2017 for his company, KMG Chemicals Inc. The clincher, he said, was a banker on the ground.
“It wasn’t someone flying in from New York, filling up their calendar for the week and flying out,” he said. KMG later agreed to sell itself to a competitor, which had also hired Goldman Sachs.
Growth Hunt
It’s not like Goldman has never dealt with smaller companies, but the push to nurture them as a significant source of revenue has gotten more serious in recent years and urgent in recent months.
Veteran investment banker David Solomon took over as chief executive officer in October, shuffling senior managers. His team is contending with a weakened environment for trading, which has hit Goldman especially hard -- the firm’s four best years in terms of revenue all came before 2011.
That’s led to a fresh and deliberate effort to consider new types of clients and develop ways to meet their needs. Executives may tout such initiatives Thursday when hosting the first annual shareholder meeting of Solomon’s tenure.
“There is a focus on trying to find growth,” Gregg Lemkau, one of Goldman’s three heads of investment banking, said in a interview. “Two ways to grow are more clients and more products.”