Goldman Sachs partners are expecting the firm to announce today that it will end nearly 130 years of partnership and launch the investment bank on the stock market, in what is likely to be one of the largest initial public offerings in history. Among the beneficiaries of a flotation would be Mr Peter Sutherland, who is a senior partner and managing director of Goldman Sachs International.
Following an emotionally charged meeting of its 190 partners which ended on Saturday evening, the six-strong executive committee met yesterday afternoon at the firm's New York headquarters to discuss the move and thrash out the details of the planned public offering, which is expected to consist of about 15 per cent of the firm.
Although partners said they thought the plan would be approved, the formal decision was not expected until late yesterday. Based on discussions which took place at the partners' meeting, Goldman partners believe the total value of the firm is around $30 billion. This means an initial public offering is likely to be around $3 billion-$5 billion.
How the money from a flotation would be shared out is not clear, but estimates suggest that partners' stakes in the firm could be valued on average at $100 million (£71 million), with some of the more senior partners having stakes worth $200 million or more. Mr Sutherland, the former head of the World Trade Organisation, is relatively recent partner, joining in late 1995. However, as he is in a senior position - effectively heading Goldman's operations outside the US - he will certainly hold a valuable stake. If around 15 per cent of the firm is floated, then partners are likely to receive a cash pay-out for a portion of their shares, while retaining the majority of their stakes which will then have a realisable market value.
People at the meeting said no formal vote was taken but the consensus was in favour of going public. Mr Jon Corzine, co-chairman and co-chief executive officer of the firm, who has backed the plan, has consistently said the firm should not launch an initial public offering without "overwhelming consensus" among partners.
The next step, assuming a decision by the executive committee to go forward, is to develop a detailed plan which would be put to the partners for a formal vote. This is likely to happen in mid-July, according to people who attended the meeting. The firm would then be expected to make its first filing to the Securities and Exchange Commission the following day.
According to people familiar with the process, the firm would have to file for the offering by the end of July if it wanted to make the offering at the end of September, which is thought to be the likely timing.
People at the firm said yesterday it was not yet clear exactly how the spoils would be divided, but there had been strong agreement that all the firm's 11,000 full-time staff should benefit.
As much as $6 billion- $8 billion of the total value of the firm could be assigned to Goldman staff below the level of partner, though the bulk of that would go to people ranked associates or above. This is because of strong concerns that the structuring of any public offering should try to bind people to the firm.
In 1996, when the issue of a public offering was last discussed, it was dropped without a formal vote because of strong opposition, largely from junior executives who had not yet made partner and felt they would lose out financially.
At the partners' meeting at a secluded conference centre in Pallisades, a suburb of New York, Mr Corzine gave what has been described as an emotional speech, giving both sides of the argument for public offering and emphasising the importance of excellence and unity. People there said there was a strong majority in support of the move, although it was not universal. "There is a consensus that if this has to happen, it will get done in the right way and at the right time," said one partner.
