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Goldman Sachs has long been a trusted adviser of corporate America, whispering in chief executives’ ears as they plot billion-dollar mergers and acquisitions. But for much of the past decade, the bank showed a far from sure touch in its own strategic choices when it came to striking deals. That is changing.
After one very expensive flirtation with consumer banking and a period where it seemed to want to become a tech company, Goldman has been refocusing on what it knows best: trading, investment banking and, increasingly, managing the money and assets of wealthy individuals. And it is stepping up its acquisitions to do so.
The $2bn acquisition this week of Innovator Capital Management, a $28bn defined-outcome ETF specialist, caps a burst of dealmaking to expand Goldman’s wealth and asset management arm. It also snapped up secondaries platform Industry Ventures for $1bn last month and took a stake in asset manager T Rowe Price in September.
The revival of M&A animal spirits at Goldman reflects the long-standing goal set by chief executive David Solomon and president John Waldron to generate more stable, recurring revenue rather than living and dying by the swings of investment banking and trading.
“That was the initial thrust of getting into consumer lending — to get more predictable revenues,” said Gerard Cassidy of RBC Capital Markets. “Now, as they pivot into wealth and asset management via these recent acquisitions, they’re building a stream of revenue that should be less volatile than investment banking and trading, in which they are top-notch, best-in-class.”
A key force behind the shift is Goldman’s global head of asset and wealth management Marc Nachmann, a reserved banker known inside the bank as “Mr Fixer”. “Wherever you put Nachmann he makes things better,” said a Goldman veteran. “He’s unemotional and gets stuff done, which is why Solomon loves him.”
There is something faintly nostalgic about this flurry of activity. For the first time in years, Goldman is behaving a bit like its pre-financial-crisis self — opportunistic, fast-moving, willing to place targeted bets. This, says a former partner, feels closer to Goldman’s roots.
In many ways, Solomon is partly following the model successfully pursued by Morgan Stanley’s former boss James Gorman: manage the fortunes of wealthy clients and help global companies allocate capital.
“Goldman Sachs has a history of being a fast follower. They’re typically not the leader,” said a former Goldman partner. “One of the mistakes Solomon made was trying to lead in a direction where he didn’t have the ability or experience. Goldman’s major successes have come from being a fast follower — taking other people’s ideas and out-executing them.”
But despite the focus on growing asset and wealth management, the boom in equity markets and a resurgence in dealmaking — turbocharged by Donald Trump’s more laissez-faire regulatory stance — mean the traditional businesses still dominate.
When traders are making hay amid market volatility and investment bankers are enjoying their strongest fee environment in a decade, even a fast-scaling asset-management arm can be overshadowed. But Cassidy at RBC believes that wealth and asset management will ultimately occupy a far larger share of revenue.
“It’s a very nice problem to have that your core competencies — trading and investment banking — are doing very well,” he said. “But if you look over longer periods, those businesses are cyclical. That’s when wealth and asset management will gain share, because they provide more predictable revenue streams in downturns.”
Still, the tonal shift is unmistakable. After years defined by the consumer business experiment and internal debates over what Goldman “wanted to be”, the bank is now flexing its M&A muscle with strategic clarity. The mix of bolt-on acquisitions and stakes may look eclectic, but the strategy adds up to the most confident and internally coherent period of Goldman dealmaking in years.
Whether wealth and asset management ever becomes large enough to meaningfully reshape Goldman’s earnings profile remains an open question. The bar is high. But recent deals are a signal that Goldman has stopped searching for an identity and focused more on building one.
Since abandoning the consumer-banking detour in late 2022, Goldman’s share price has risen nearly 200 per cent. The internal and external grumbles have faded, the bonuses have returned and the mood among staff and shareholders is happier. The period when Solomon looked vulnerable — when it seemed he had lost control of the narrative — feels distant.
jfk@ft.com
