The head of Goldman Sachs Capital Partners said today that Goldman will start pursuing smaller deals. Richard Friedman, speaking at the Dow Jones Private Equity Analyst conference in New York, cited a new investment environment shaped by the ongoing credit crunch for the switch in strategies.
For the past few years, Goldman has pursued massive leveraged buyouts, such as the $27 billion deal for Alltel Wireless. But problems in the credit markets have brought those buyouts to a halt. The change has been rapid and severe. "It's like the train conductor pulled the emergency stop," Friedman said.
Goldman's new smaller deals strategy will focus on "PIPES" -- private investments in public equity. With PIPES, investors take smaller stakes in target companies, and provide financing that helps smaller companies survive while they restructure. Goldman recently raised $20 billion for a new buyout fund, and much of it will be going into these smaller deals. Friedman stated that this new strategy does not imply that the pace of investments will slow; he expects to new fund to last only two to three years. "We have a multi-strategy investment business model," he said. "I'm not worried about investment pace."
Goldman will "pursue smaller deals"
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Reader Comments (Page 1 of 1)
9-19-2007 @ 4:45PM
Darlene said...
So what is the general opinion on this new strategy? Are we looking at the beginning of a trend relating to the decline of big buyouts? NewsVisual posted an interesting article this morning that took a look at the corporate connections of Goldman's current board (see article: http://www.newsvisual.com/newsvisual/2007/09/goldman-sachs-b.html ). I would be interested to know to what degree Goldman might take advantage of these connections when pursuing future deals.
9-19-2007 @ 7:38PM
michael said...
Great link -- thanks Darlene!