Goldman Sachs, mega-M&A purveyor, looks for smaller deals

NEW YORK (Reuters) – The top echelons of Goldman Sachs Group Inc’s investment bank hosted a dinner over the summer with the representatives of almost 20 private equity firms at Manhattan’s Legacy Records restaurant.

FILE PHOTO: David Solomon, CEO of Goldman Sachs, at the Bloomberg Global Business forum in New York, U.S., September 26, 2018. REUTERS/Shannon Stapleton/File Photo

The executives invited, however, were not among the buyout industry’s power players Goldman is known for banking, such as Blackstone Group LP CEO Stephen Schwarzman or KKR & Co Inc co-CEOs Henry Kravis and George Roberts.

Instead, the guests included the bosses of private equity firms such as H.I.G. Capital, Olympus Partners and Charlesbank Capital Partners. These firms focus on “middle-market” transactions, which Goldman classifies as acquisitions between $500 million and $3 billion in size, a far cry from the mega-deals it has built its investment banking brand on.

Over a meal of Atlantic halibut and dry-aged ribeye steaks, Gregg Lemkau, co-head of Goldman’s investment bank, and Alison Mass, in charge of the financial sponsors coverage group, pressed one message: Goldman is serious about advising on relatively small leveraged buyouts.

The bank has sought to back up this claim with a major hiring spree. It created a dedicated team for M&A execution within its “financial sponsors” group covering private equity clients, and has grown this group from zero to 27 bankers in the last three years. Previously, M&A execution was handled by the bank’s sector teams.

The initiative illustrates how Goldman, already the No. 1 bank for private equity firms by fees earned, is looking between the sofa cushions for any new source of income to hit its goal, unveiled last year, of growing revenues by $5 billion by 2020.

Goldman’s new chief executive, David Solomon, is

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