Goldman Sachs M&A

The recommendation of Merger and Acquisition for Goldman Sachs

Yoichi Horibe

I would like to recommend Merger and Acquisition of Information System Company for Goldman Sachs. Goldman Sachs has a division of M&A advisory but it doesn’t conduct M&A itself. They have their private equity fund, GSCP (Goldman Sachs Capital Partners) and the company’s market cap is 200 billion dollar. (Although Black Stone or Carlyle group‘s market cap is almost 1000 billion so its relatively small.) In 2005, GSCP has succeeded in M&A with SunGard which is Information Technology Company and they could provide financial service too.

The one of the reason why I recommend M&A is their investment banking business is currently stronger than their trading business. After the IT bubble burst, their trading business had grown. However after the Subprime crisis, the business revenue had plunged. Now is the time to prompt investment banking business. GS is good at conducting LBO as parent company of GSCP. Besides, Rothschild family and American government is closely related to GS executives. Rothschild family is privately doing M&A advisory business and Obama supports GS. Market value doesn’t show these factors even if the value is lower than other famous private equity. The reason why Subprime crisis doesn’t affect GS is institutional investors and governors did something for GS secretary.

In conclusion, the reason why I recommend M&A of Information System Company is Information System Company has a possibility to provide financial service as well as SunGard. Within this year, Volcker role will be conducted. This rule regulates investment to hedge fund. This impact will be tremendous and last year the top of GS said “I want to divide investment banking business from our company” because of the expectation of funding without hedge fund. However, if we figure out other way of fundraising from information platform, we could raise money without hedge fund and investment banking business will be successful.