Goldman Sachs 1

Goldman Sachs
A Financial Giant - The Success Of Its Operations

Cleopatra Warren
Managerial Finance 1
Professor Davis
March 3, 2013
Goldman Sachs 2

Abstract
The Goldman Sachs Group, Inc. is an American multinational investment banking firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients. Goldman Sachs was founded in 1869 and is headquartered in the Lower Manhattan area of New York City. The firm provides mergers and acquisitions advice, underwriting services, asset management, and prime brokerage to its clients. The firm also engages in market making and private equity deals, and is a primary dealer in the United States Treasury security market. It is recognized as one of the premier investment banks in the world.

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Marcus Goldman

Marcus Goldman was a German-Jewish immigrant businessman. He was born in what is now Germany and immigrated to the United States in 1848. He was one of the original founders of Goldman Sachs, which today is one of the world's largest global investment banks. Goldman pioneered the use of commercial paper transactions, making them quicker and more efficient. Though the bank stayed small during Goldman’s lifetime, the foundation was set to turn Goldman Sachs into the powerhouse it has become. When Goldman retired in 1894, at the age of 73, he left the company in the hands of Samuel Sachs, his son-in-law. Samuel Sachs was born in Maryland to Jewish immigrants from Bavaria. Sachs pioneered the issuing of stock as a way for new companies to raise funds. Goldman Sachs began to underwrite securities offerings for such large firms as Sears, Roebuck and Company. During this time Goldman Sachs also diversified to become involved in other major securities markets,

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like the over-the-counter, bond, and convertibles markets which are still a big part of the company's revenue today.
In 1885, Goldman took his son Henry and his son-in-law Ludwig Dreyfuss into the business and the firm adopted its present name, Goldman Sachs & Co. The company made a name for itself pioneering the use of commercial paper for entrepreneurs and was invited to join the New York Stock Exchange (NYSE) in 1896.
In the early 20th century, Goldman was a player in establishing the initial public offering (IPO) market. It managed one of the largest IPOs to date, that of Sears, Roebuck and Company in 1906. It also became one of the first companies to heavily recruit those with MBA degrees from leading business schools, a practice that still continues today.
On December 4, 1928, it launched the Goldman Sachs Trading Corp. a closed-end fund. The fund failed as a result of the Stock Market Crash of 1929, hurting the firm's reputation for several years afterward. Of this case and others like Blue Ridge Corporation and Shenandoah Corporation John Kenneth Galbraith wrote: The Autumn of 1929 was, perhaps, the first occasion when men succeeded on a large scale in swindling themselves.

In 1930, Sidney Weinberg assumed the role of senior partner and shifted Goldman's focus away from trading and towards investment banking. It was Weinberg's actions that helped to restore some of Goldman's tarnished reputation. On the back of Weinberg, Goldman was lead advisor on the Ford Motor Company's IPO in 1956, which at the time was a major coup on Wall Street. Under Weinberg's reign the firm also started an investment research division and a municipal

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bond department. It also was at this time that the firm became an early innovator in risk arbitrage.
Gus Levy joined the firm in the 1950s as a securities trader, which started a trend at Goldman where there would be two powers generally vying for supremacy, one from investment banking and one from securities trading. For most of the 1950s and 1960s, this would be Weinberg and Levy. Levy was a pioneer in