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  • 1. The Goldman Sachs Group, Inc. “ Goal is to assist clients with the tools and services needed to decrease administrative burdens of managing money to allow them to focus on increasing trading performance, building their business and attracting new sources of capital – Mission Statement” Marcin Ferenc, Victoria O’Connor, Lisa Brill, Tom Iadanza, Jay Lee, Michael Quijano, Anthony Sorrentino
  • 2. Company Overview
    • Founded in 1869, been providing investment banking, securities, and investment management services to corporations, government, and high-net-worth individuals worldwide
    • operates in about 25 different countries and the United States.
    • Investment Banking, Trading and Principal Investments, and Asset Management and Securities Services.
    • The main headquarters for the company are located in New York, New York.
  • 3. Company $ Size
    • In 2006, earned $9.54 Billion within the United States
    • Earnings per share were $19.69
    • Total Compensation per employee was $622,000
    • 13% of revenues came from investing on its own behalf
    • Goldman Sachs had total revenue of $37.7 billion
      • $9.54 billion as its total profit
  • 4. Revenues (millions) for Year Earnings per share ($) for Year 2007 2006 2005 2004 1 st Quarter 22,280 17,246 9,964 7,905 2 nd Quarter 20,351 18,002 8,949 7,676 3 rd Quarter - 15,979 12,333 6,803 4 th Quarter - 18,126 12,145 7,455 Year - 69,353 43,391 29,839 2008 2007 2006 2005 1 st Quarter E5.19 6.67 5.08 2.94 2 nd Quarter E4.98 4.93 4.78 1.71 3 rd Quarter E4.45 E6.13 3.26 3.25 4 th Quarter E5.87 E5.41 6.59 3.35 Year E20.49 E23.14 19.69 11.21
  • 5. Employees and Revenue
    • Goldman Sachs employed 26,500 people
      • New York division maintains 13,000 employees
    • Investment Banking makes up for $5.6 billion in revenues
    • Trading and Investing portion produces $25.6 billion revenues
    • Asset Management acquires $6.5 billion in revenues
  • 6. Services
    • Investment banking
        • Organizes transactions for corporations, financial institutions, and governments
          • -mergers, acquisitions, divestitures, the issuance of equity or debt capital, or a combination of these
        • global relationships combined with its understanding of local economies, industries and cultures help to assist with elite advice and service consistently
    • Trading Division
      • Trading and Principal Investment
        • speeds up customer transactions and takes aptness positions through market making, trading of fixed income and equity products, currencies, commodities and swaps and other derivatives
      • The Trading and Principal Investments activities:
        • Fixed Income, Currency and Commodities, Equities and Principal Investments
  • 7. Services
    • Asset Management
      • Deals with the investment necessities of institutions, governments and government agencies globally
      • A strong understanding in local economies, industries and cultures facilitates a global relationship which assists in assuring customers of their wants; being access to investment opportunities, consistent, risk-adjusted performance, and solid and consistent returns
      • Resources and Relationship and In-Depth Research
        • Resources and Relationships have offices in the United States, London and Tokyo where they offer access to portfolio management teams on-site and globally
        • In-Depth Research has a stronghold on research stems through cautious gathering of information and perspectives which facilitates knowledgeable decision making and objective of solid, consistent returns
  • 8. Services
    • Securities Services
      • Securities services include Global Securities Services which is a group pertaining to Prime Brokerage, Securities Lending, Futures Services and Financing Services with a varying and global client base
      • Securities services include Global Securities Services which is a group pertaining to Prime Brokerage, Securities Lending, Futures Services and Financing Services with a varying and global client base. Goldman Sachs also offers a Prime Brokerage product
      • The Goldman Sachs Securities Lending programs give clients an opportunity to create incremental revenues through low risk and well-understood transactions
  • 9. Services
      • Fixed Income, Currency and Commodities
        • makes markets in and trades interest rate and credit products, currencies and commodities, structures and works with a wide range of derivative transactions and proprietary trading
        • main products are commodities and commodity derivatives, credit products which include investment-grade corporate securities, high-yield securities, bank loans, municipal securities, credit derivatives, emerging market debt, currencies and currency derivatives, interest rate products, money market instruments and mortgage-backed securities and loans
        • deals with equities which makes markets in, acts as a specialist for and trades equities, it arranges and deals with equity derivative transactions and works in proprietary trading
  • 10. Services
    • Risk Management
      • Division which primarily delivers favorable returns compared to the market
      • Goldman Sachs client base looks to risk management to create performance dependable with their forbearance to risk
      • The company provides clients with mutual funds and asset management products in addition to specialized services for their institutional investors
      • Goldman Sachs looks to provide clients with global capabilities, flexible technology solutions and easy access to information.
  • 11. Major Subsidiaries
    • Goldman Sachs International
    • Cogentrix Energy
    • GS Capital Partners
    • Goldman Sachs (Asia) Finance
    • Goldman Sachs (Japan) Ltd.
    • Goldman Sachs Canada Inc.
    • Goldman Sachs Foreign Exchange (Singapore) Pte.
    • Goldman Sachs (UK) L.L.C
    • Goldman Sachs Bank USA
    • Goldman Sachs Foreign Exchange (Singapore) Pte.
    • Goldman Sachs L.L.C
    • GS Equity Markets, L.P.
    • GS European Performance Fund Limited
    • GSCP (DEL) Inc.
    • GSGF Investments Inc.
    • The Goldman Sachs Group, Inc.
    • The Hull Group, L.L.C
    • Sargasso Limited
    • Menhetia Inc.
  • 12. Industry Segment
    • Composed of two segments:
      • investment management
      • investment banking and brokerage
    • Major reporting segments:
      • provides different services to clients
      • serve the purpose of bringing savers and borrowers together
      • By pooling the savings of individuals, they increase liquidity, improve diversification, and reduce transaction costs for investors
        • national full-line firms
        • large investment banks
        • regionals
        • New York City based brokers
        • discount and online brokers
  • 13. Domestic Competitors Competitors Percentage (%) of the Market Share Goldman Sachs 28.6% Citigroup 27.2% Morgan Stanley 25.7% JPMorgan 23.4% Merrill Lynch 19.7%
  • 14. Global Competitors
    • Global investment banks
      • Goldman Sachs
      • Citigroup
      • Morgan Stanley
      • JPMorgan Chase
      • Merrill Lynch
      • Europe’s Credit Suisse
      • UBS AG
      • Deutsche Bank
    • U.S based investment banks hold top six places in the global competitions
  • 15. Global Competitors
  • 16. Technology
    • Advances in technology
      • lowered transaction costs
      • raised the market
      • operating efficiencies
    • Client demand for specialized investment products
      • new financial product innovations:
        • new hedging vehicles, derivative products, and specialized mutual funds.
    • State of the art computers
      • do work that humans used to do
      • speeds up market response and transaction time
  • 17. Employment
    • Investment banks:
      • hire more employees when market is doing well
      • cut back on employment when market is declining.
      • Industry health:
        • employed 803,700 (up 1.7% from 2005)
  • 18. Business Segments
    • Investment Banking, Asset Management, Trading
      • Trading is largest of the three core segments, and is company's biggest profit center
        • Fixed Income, trading in interest rate and credit products, mortgage-backed securities and loans, Equities like trading in equities and equity-related products and executing client trades in equities, and Principal Investments like merchant banking investments and funds.
  • 19. Investment Banking Segments
    • Financial Advisory and public offerings and private placements of equity, equity-related and debt instruments.
    • Leading investment banks in its market
    • Mergers and acquisitions
      • avoid hostile takeovers
      • this segment accounts for around 15 percent of Goldman Sachs' revenues
  • 20. Securities Services
    • Rapidly growing business as it gains market share
    • Asset Management,
      • provides large institutions and very wealthy individuals with investment advisory, and the management of mutual funds.
    • The Securities Services
      • provides prime brokerage, financing services, and securities lending to mutual funds, hedge funds, pension funds, and foundations.
      • accounts for around 19%
  • 21. Economic Growth
    • Investment banks:
      • sales, trading, and merger advisory businesses remain strong despite increased market volatility
    • Sales and Trading:
      • generate most of industry’s revenues
    • Goldman Sachs:
      • FICC generated net revenues of $4.6 billion
      • Equity trading revenues increased 35%
      • Trading commissions increased 10%.
  • 22. Economic Growth
    • 2006 and 2007, investment banks had a boost in their advisory businesses
      • record numbers of global mergers and acquisitions
      • surge in leveraged buyout activity
    Year Announced Deals Percent (%) Increase 2006 $3.8 trillion 37.9% 2007 $1.1 trillion (1 st quarter) 27%
  • 23. Economic Growth
    • Private equity firms
      • $11 billion in fees to Wall Street investment banks
        • merger boom increased:
          • -advisory fees
          • -debt lending
          • -underwriting fees
  • 24. Globalization
    • Globalization:
      • U.S and European investment banks compete for business around the world
      • Expand into markets to increase growth or competitiveness, and satisfy demand
      • Investors are looking to invest globally to enhance return and reduce risk
      • Markets are opening in developing countries allowing investment services companies to serve their increasingly wealthy populations.
  • 25. Globalization
    • U.S and European investment banks are expanding to China
      • rapidly growing Chinese market
    • Goldman Sachs:
      • joint venture investment banking company, Goldman Sachs Gao Hua Securities
      • hold a one third stake which is the maximum allowed
      • lent $100 million to Fang Fenglei, a Chinese dealmaker who set up Gao Hua
  • 26. References
    • www.GS.com
    • www.spiegel.de/international
    • Galenet.galegroup.com
    • Standard and Poor’s Net Advantage
    • Hoover’s Company Records
    • Business & Company Resource Center
    • Finance.yahoo.com
    • en.wikipedia.org