Goldman Layoffs

Praesto's picture
Rank: King Kong | 1,076

Anyone here feel any of this?

Article says layoffs were at higher levels VP+ and affected M&A, ECM, and DCM.

From Yahoo:

Goldman Sachs said to cut dozens of investment banking jobs

Goldman Sachs Group Inc. cut investment banking jobs in the last few weeks, joining securities firms that are adjusting to a slowdown in deal activity, according to people familiar with the matter.

The bank eliminated dozens of managing directors, executive directors and vice presidents across the mergers and debt and equity capital markets teams, the people said, asking not to be named as the details aren't public. The cuts affected bankers in cities including London, New York and Hong Kong and are in addition to the bank's annual 5 percent cull of employees deemed underperformers, the people said.

Goldman Sachs Chief Executive Officer Lloyd Blankfein is embarking on his biggest cost-cutting push in years as the bank tries to weather a slump in trading and dealmaking, people familiar with the matter told Bloomberg in April. The job reductions follow a similar move in the firm's trading division this year, driven in part by a 60 percent drop in first-quarter profit.

http://finance.yahoo.com/news/goldman-sachs-said-c...

Comments (34)

Jun 1, 2016

I feel it real good

Jun 1, 2016
oreos:

I feel it real good

I hope for the best for you oreos. The current economic environment is not looking to make a good climate for IB in the next couple years.

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Jun 1, 2016
oreos:

I feel it real good

My condolences. On the other hand, enjoy the changes in perspective this sort of thing forces upon you.

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Jun 1, 2016
SSits:

oreos:I feel it real good

My condolences. On the other hand, enjoy the changes in perspective this sort of thing forces upon you.

I was just joking (there's a song on the 1st 2manyDjs album with that lyric). On the buy-side now

Jun 1, 2016

This isn't that surprising given the layoffs we are already seeing from major European banks. The IPO market is weak this year, and GS is not the strongest in debt financing. It makes sense for them to cut costs sooner rather than later. It sucks that hiring/firing is so reactive instead of proactive. I'm sure that those who were let go will find somewhere to go.

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Jun 2, 2016
Thomas Pynchon:

This isn't that surprising given the layoffs we are already seeing from major European banks. The IPO market is weak this year, and GS is not the strongest in debt financing. It makes sense for them to cut costs sooner rather than later. It sucks that hiring/firing is so reactive instead of proactive. I'm sure that those who were let go will find somewhere to go.

Woah, woah, woah. Teh Goldman Sachs is the strongest in everything.

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Jun 1, 2016

Just saw that on Dealbreaker. Yikes.

Jun 1, 2016

Not a PWM fanboy but isn't it odd that we practically never hear of BBs cutting PWM head count and instead hear of UBS and MS saying they'd like to expand their PWM business?

Thoughts? @thebrofessor

(Also, I know PWM at GS is totally different than at the wirehouses)

Best Response
Jun 1, 2016

that's because PWM has a double digit ROA, is safe, and is stable.

example: say I produce $1mm in revenue a year (I don't, but it's a nice thought). the firm pays me $400k pretax plus benefits plus my assistant & her benefits. all in all, maybe $550k total. then my portion of an office, computer, desk, same for assistant, MAYBE $600k (our offices are small). that's 40% ROA and all you have to do is make sure I don't become a compliance nightmare.

on top of this, sure there are manager salaries, office supplies, etc., but since I'm 100% commission, there's no risk with me. bring in a MD at $1mm a year plus 30-70% bonus, and say he doesn't bring in a single deal his first year? on top of that all of the analysts, associates, VPs, and their expense accounts, I'd be shocked if the ROA in banking is higher than in PWM.

it's also because my business is like an annuity. say my assets are 50% stocks and 50% bonds billed at 1%. I'm not having to push ideas on clients, I collect a management fee, clients' assets grow (hopefully faster than withdrawals), they fluctuate, I bring on clients, etc., but mostly it's stable revenue, versus banking which I'd imagine is feast or famine.

there will always be a need for investment banking, equity research, etc., but it wouldn't shock me if more firms start to try to look like Morgan Stanley (50% WM, 50% institutional biz e.g. banking, ER, S&T, AM, etc.).

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Jun 1, 2016
thebrofessor:

there will always be a need for investment banking, equity research, etc., but it wouldn't shock me if more firms start to try to look like Morgan Stanley (50% WM, 50% institutional biz e.g. banking, ER, S&T, AM, etc.).

Agree. I've seen a few IBs move towards the "bond + call" or "annuity + market facing" business models. The bond/annuity is Asset Management and other type of businesses that generate a nice, stable, but unsexy stream of annuity-like income. The call/market-facing businesses are divisions like IB and securities who see a lot more volatility. Like revenue, headcount numbers are more volatile in the latter.

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Jun 1, 2016

Agreed. I definitely still think that M&A is a practically a timeless industry. It's just interesting to see how some of the BBs are shifting towards PWM.

Jun 7, 2016

While I agree PWM is safer, perhaps you under estimate the income potential of IB MD. You may be a safe 40% return on your $1mm. IB MD is going to make the firm multiples of that for each deal. And he isn't going to be dry for his first year unless he (and the firm) is developing a completely new product type. So while IB may have dry years, that is not the expected and the revenues are going to be 8+ digits in normal years. So there is more volatility and more headcount below him. But also much more revenue in normal and good years.

The industry is definitely shifting towards heavier PWM... How sustainable is it when wall street starts crowding in the same area? Good for you in the short run (banks will up your pay and take lower returns)... but the merry-go-round will stop at some point.

Jun 1, 2016
billbelichick69:

Not a PWM fanboy but isn't it odd that we practically never hear of BBs cutting PWM head count and instead hear of UBS and MS saying they'd like to expand their PWM business?

Thoughts? @thebrofessor

(Also, I know PWM at GS is totally different than at the wirehouses)

That's a pretty obvious one. PWM produces the most steady and stable revenue stream. For example, I believe MSWM has over $2 trillion in aum. Now consider that there are more brokers over 80 years of age than under 30, and you can see why they might be interested in pumping more money into PWM, which is low risk as it runs on a commission model.

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Jun 1, 2016

Do members (especially Certified Users who have experience in the finance industry) think that current college students should be looking to receive internships and/or full-time offers at boutiques/EBs/MMs instead of BB firms given the latter's volatility and added regulatory burdens?

Any thoughts are welcome.

Jun 1, 2016

get the best job you can out of college, period. regulation shouldn't concern you at the level you're talking about.

Jun 1, 2016

I didn't word my sentences correctly. Given that BBs are more prone to reducing headcount than EBs/MMs (at least from what I can tell - I fully acknowledge I may be wrong), should that factor into my decision-making process in regards to accepting offers for internships (i.e. finding a way to maximize return offer) or accepting full-time gigs (i.e. not getting laid off)?

Jun 1, 2016

As others have said, get the best job you can and please don't post in a few months asking about bank X vs Y vs Z unless you've got solid offers from all 3.

On a slightly related note, I would say an EB is probably more desirable anyway than a BB nowadays. Better comp, exposure to high profile deals, smaller (sometimes) deal teams, superb brand names. Unfortunately hours can be pretty brutal.

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Jun 1, 2016
Jun 2, 2016

Heard this trickled down through the analyst pool. Rumors of a hiring freeze are circling about. Layoffs were even felt as far as the Dallas (Realty Mgmt Group) which is apparently rare for that office.

Jun 5, 2016

The bank is seriously looking to trim fat. Still interview and get an offer- at the very least you 'passed the filter' and other places will snatch you up.

Jun 5, 2016

Do people think this would this seriously affect offer-rates for SAs this summer? Or would it just affect FT hiring instead? Obviously no one can say for sure but curious to hear other's thoughts

Jun 6, 2016
wvu:

Do people think this would this seriously affect offer-rates for SAs this summer? Or would it just affect FT hiring instead? Obviously no one can say for sure but curious to hear other's thoughts

I don't think this will hurt SA for summer hiring. It's cheap labor for them, right?

Jun 6, 2016

Doubt it will have a huge impact but might be a little unrealistic to assume that there won't be any. I imagine that interns on the cusp might not receive offers that they could've in better times.

Especially since most of the recruiting class was filled before the cutting began, chances are there was a bit of over-hiring. Ideally, the company would've known about the potential cullings beforehand and handed out less internships but it doesn't always work out that way.

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Jun 8, 2016

There have been cuts basically across the firm (banking, trading, ER, BO/MO Finance roles, Technology (heavy), Operations). They are basically over now and I think, most likely, it's probably been an
overreaction to respond to investors over the next couple quarters. And if we see a pick up at all in the markets over the next six months you may see a quick reversal next year. Also, Goldman doesn't have a dedicated M&A team (outside of a few senior advisors). It's all done within the coverage groups. And the cuts have been more focused within the financing and ECM groups, as the coverage groups have been relatively ok. It's also been much more likely you are forced out if you are senior then it is for the juniors. For the most part the only juniors that have been leaving are people that would have been cut anyways for being poor performers.

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