Streetwise — Chapter 15: To IPO or Not to IPO

1. 1. Goldman Sachs considered going public multiple times, starting in the late 1960s, but lacked partner consensus.
2. 2. Goldman's partnership structure created a capital disadvantage compared to public competitors, as partner capital could leave upon retirement.
3. 3. Goldman's inability to offer equity made it harder to recruit and retain talent, as competitors could offer stock options with vesting periods.
4. 4. Arguments against going public included preserving partnership culture, avoiding double taxation, and escaping the burdens of SEC filings and activist shareholders.
5. 5. The repeal of Glass-Steagall and consolidation on Wall Street made it untenable for Goldman to remain a private partnership with impermanent capital.
6. 6. Internal conflict between Jon Corzine and Hank Paulson over the IPO and management style led to a palace coup, with Paulson becoming co-CEO.
7. 7. The 1998 Russian default and Long-Term Capital Management crisis caused Goldman to postpone its IPO, as market conditions deteriorated.
8. 8. Goldman Sachs successfully completed its IPO on May 4, 1999, at $53 per share, closing at over $70 on the first day.
9. 9. The IPO windfall led many partners to retire early or pursue other interests, lowering their tolerance for job annoyances.
10. 10. Going public had less impact on Goldman's culture than globalization, technology, and regulatory changes, and was necessary for the firm to survive the 2008 financial crisis.