Goldman Sachs Group Inc. investment bankers may be coming to an airport near you. Dealmakers at Wall Street’s top-ranked merger firm are fanning out across the US and Western Europe as part of a new plan to drum up additional business. They’re targeting smaller companies, many in America’s hinterlands, ingratiating themselves to a tier of clients often neglected by Wall Street’s white-shoe advisers.
It’s an unlikely growth strategy for a firm that’s long dominated mergers and acquisitions banking, often by advising Fortune 500 companies such as Amazon.com Inc. on its purchase of Whole Foods Market Inc. Chief Executive Officer Lloyd Blankfein has asked the investment bank to kick in 10 percent of a $5 billion growth plan despite its leading market share.
Led by 48-year-old John Waldron, who runs the division with Gregg Lemkau and Marc Nachmann, managers embarked on their most comprehensive review of clientele since the financial crisis. What they found was a lot of white space, neglected industry areas and customers worthy of renewed attention.
The executives are now hiring senior bankers in industries where the firm lacks a top-tier presence or building out regional offices closer to local businesses. And they’ve simply found a lot of companies that they haven’t worked with before. “It gives us more opportunities to be Goldman Sachs in more places,” Waldron said. “It’s clearly core to the whole plan.”
Waldron declined to give a number, other than to say he has lists with about 10 percent to 15 percent more companies on them than those currently on the bank’s roster. In other cases, clients who have been languishing at the bottom of a banker’s coverage list may get reassigned and receive more attention, he said.
Goldman Sachs plans to offer “middle market” companies a full suite of services, from providing advice or arranging financing, all the way to investing its own money. It’s also asked senior bankers to search for smaller companies in need of growth capital.
“Investing helps us to be smarter and more knowledgeable about those industries, trends and themes, and it puts our bankers more in the flow of where the disruption is happening and where the formation of ideas, capital and companies is happening,” he said.
The initiative is reminiscent of a strategy led decades ago by legendary Goldman leader John Whitehead. While well known for encouraging the firm’s overseas expansion, he also oversaw a pioneering project in the early 1970s that used computers to track thousands of up-and-coming US companies with at least $1 million in earnings. The idea was to assign a banker to every one of them and win their business, he told the New York Times in 1971. Years later, Waldron rose up through those operations.
This new push also reflects tectonic shifts emanating from Goldman Sachs’s 41st-floor executive office. As revenue from trading declined after the financial crisis, the bank known for catering to big clients decided the best direction for growth on several fronts was down. It has since built an
online bank for consumers.