Is there ever a time when even investment bankers think they’ve made too much money? This question will soon be put to the test when Goldman Sachs in the US buys out 133 equity partners in Australia.
The investment banking headhunters we spoke to think most Goldmanites will stay loyal to the firm. Senior Australian bankers have pushed hard for the deal because it will help expand local operations by giving them greater access to the bank’s balance sheet and its globally-integrated platforms.
Goldmans plans to bolster its presence in foreign exchange, commodities trading, and government and corporate bonds, among other services. Logically, says one headhunter, equity partners and those below them are unlikely to walk away when their trading and deal-making opportunities are potentially greater than ever. “This could lead to higher bonuses down the track, if market share increases,” he adds.
The local Goldmans business is worth A$1bn, according to sources quoted in The Australian Financial Review. That means partners will divvy up $550m between them from their 55 per cent stake. The AFR reckons first-year partners will get a 0.1 per cent share, while those on the senior management committee may hold between 2 and 3 per cent.
Not many partners will defect on a like-to-like basis to other large international investment banks. However, a handful may leave if they miss the independent, local culture of the existing partnership and don’t want to become fully-fledged employees in Goldmans’ global workforce of 35,700, says the headhunter. Boutiques may be the ones to benefit from any departures. “Some people won’t like having to take orders from America.”
According to the AFR, David Ryan, co-head of Goldman Sachs Asia, does not expect any serious changes to the firm’s local leadership. Partners have injected millions in cash into the Australian entity, he adds.
And even if someone does want out, says another headhunter, “you can be sure there will be some pretty serious golden handcuffs going along with this offer. They won’t just hand over the money”.
No heady hiring
But while Goldmans won’t lose too many staff, the buy-out won’t create a recruitment binge in the short time either, he adds. “Like all IBs, Goldmans will be cautious this year – it’s a soft market at moment.”