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Earnings would be more volatile in these new businesses, and to remain competitive a fortified capital base would need to be built. Instantly the
firm would lose its ability to focus on the long term, as quarterly reporting requirements and the demands of outside stockholders would have to be
reckoned with. What was taking place this day was open and honest conversation. We can't do leveraged buyouts and arbitrage--or we can do a
little of each. For most present, a feeling of true partnership permeated the place; the partnership had reaffirmed its commitment to itself and
everyone was on board. Lots of venture dollars are organized here. Private capital would not come cheaply. If you have a question, please check
out the FAQ first. If it happened in a year when the firm performed poorly, as it would in , for example, the results could be extremely damaging.
The dividing lines between generations of partners had always existed, but now they would be drawn in the sand. Devotion to the firm's clients,
new and old, was considered inviolate and formed the bedrock on which the firm's investment banking division sat. Perhaps the most atypical
feature of the class of was the number of partners elevated from the ranks of salesmen and traders. Under Weinberg's direction, Friedman and
Rubin set themselves the challenge of building the premier investment banking firm that would dominate every aspect of the business. A contingent
of older partners was very interested in selling the firm. Further study would be needed; other avenues for seeking capital would be explored. The
partners' capital at the time was a little more than a billion dollars and all members of the class of received a. A few stood up and spoke
emotionally and at length about the value they placed on the partnership--what it had meant to them personally. To find out how to look for other
reviews, please see our guides to finding book reviews in the Sciences or Social Sciences and Humanities. Appeared in Publishers Weekly on
They had deliberated for two agonizing months while speculation among the troops grew. In the plans for international expansion were still mostly
just talk. When he stood up to speak, his authority far outstripped his position. On the morning of December 6, the partners convened in the large
meeting room on the second floor of 85 Broad Street, the firm's three-year-old headquarters in lower Manhattan. Endlich, a former Goldman
Sachs vice president, has researched the company's history and analyzed the organizational culture through interviews with its officers and
employees. He started early, hours before the official list would be published. If Rubin and Friedman failed, the critics would argue that the firm
should have concentrated its resources, capital and human, on a few choice businesses and shared the risk with stockholders. If the firm were to
go public, it would have to seize the moment. Yet the partners had not been asked to rubber-stamp a decision handed down from above. Most
agree that it was an amateurish effort; what was presented was little more than a concept. This contrasted sharply with the way other partnerships
had gone about selling their firms to larger corporations or the investing public. In the largest U. There was little support from the troops for going
public, and the newest partners came under heavy pressure to vote against the proposal. These options were rejected. The firm had grown and
specialized. The love affair with hostile takeovers that gripped corporate America in the s drove many frightened targets into Goldman Sachs's
experienced and unthreatening arms. Two years earlier, commenting on Lehman Brothers's merger with Shearson American Express, he had said,
"Wall Street has been a highly entrepreneurial arena. They were determined not to let it pass. Unlike Goldman Sachs's two days of soul searching,
the Salomon Brothers meeting, which began in the evening, was so short that it left plenty of time for a celebratory dinner that same night. Much
was at stake; the future of Goldman Sachs would be decided in the next thirty-six hours. Others have called it haphazard and half-baked,
emphasizing that its quality was far below that of presentations the firm routinely gave to its clients. Overnight they would be transformed into
managing directors and paid a multiple of the value of their investment in the company. The partnership had never before openly entertained the
notion of a public offering, although behind closed doors the management committee had discussed and dismissed the idea many times. Submit a
new link.
Goldman Sachs
Sexual harassment and racial discrimination suits, with ever larger settlements or awards for damages, were becoming increasingly common on
Wall Street. Those telephoned that autumn morning were being offered not only vast wealth but virtual lifetime employment as well. Fundamentally,
Weinberg did not believe that anyone was entitled to cash in on the firm's legacy. Berry would be first and Garland E. The firm's spectacular ascent
is traced in the context of its tenacious grip on its core values. For most present, a feeling of true partnership permeated the place; the partnership
had reaffirmed its commitment to itself and everyone was on board. IBS was set up to carry on the work of Sidney Weinberg, and it was fitting
that his eldest son was at the helm. Although out of strict economic self-interest they were all opposed to the management committee's proposal,
they felt a weighty responsibility to do what was right for the firm. For the hundred or so in "the zone," the inside term for those actually in
contention, everything was at stake--prestige, recognition, riches. He reminded the partners of their stewardship, of their responsibility to the next
generation. Along with the other members of a syndicate, Goldman Sachs had agreed to underwrite the sale of 32 percent of state-owned British
Petroleum for Her Majesty's government. And she describes in detail the monumental events of that shook Goldman Sachs and the financial world.
The stock market was buoyant and new issues were selling well. We watch him as he steers the firm through the aftermath of the Crash and raises
the Goldman Sachs name to national prominence. In an abrupt break with one hundred seventeen years of history, the management committee was
proposing that Goldman Sachs become a public corporation. In various scenarios, the analyses showed how the partners' capital would grow over
time if the firm remained a partnership. Friedman and Rubin strongly supported the proposal. The banker is there to do his client's bidding. The
night before Saturday morning's presentation the worldwide investment banking division held its annual dinner, a celebration of the year's
achievements and for the division one of the biggest events of the year. They were determined not to let it pass. Of course the risks were great--a
stock market crash was in fact less than a year away--but the potential for building substantial wealth was obvious to all. In any given year, if the
firm were to lose money, some of those gains could be wiped out. Is there a problem with an e-resource? As Weinberg traveled through the
alphabet, some of the dozens passed over would shut themselves in their offices, while a few would storm out of the firm's headquarters.
Personally most partners wished the firm to remain a partnership; yet a judgment needed to be made as to whether the firm required a larger and
more stable capital base in the near future. When the partners filed back into the second-floor meeting room, most still believed that there would be
a vote. Barring any missteps, the young men and woman answering Weinberg's phone call could expect to retire with a nest egg worth tens of
millions of dollars. The Changing of the Guard p. A powerful contingent of banking partners, whose businesses did not require additional capital,
remained unconvinced of the firm-wide need for greater resources. Capital should be a restraint.