Goldman Sachs is assembling a team of senior bankers focused on middle-market private equity. Here are the key hires and the playbook they’ll use to land new clients.

Goldman Sachs has assembled a team of five senior bankers devoted exclusively to building relationships with middle-market private equity firms, a first for the investment banking giant that pits it head-to-head with boutique firms that cater to those clients. 

David Friedland, global head of M&A for Cross Markets Group, a division launched in April that’s aimed at capturing M&A advisory and finance market share from companies valued at between $500 million and $2 billion, shared the details of the new hires with Business Insider in an interview. 

He said that Cross Markets Group plans to add two more senior bankers in 2020, rounding out what will become a seven-member managing director team to get Goldman in the door of middle-market PE firms and their portfolio companies. 

Goldman declined to offer figures on the expansion of more junior staff, such as vice presidents, associates and analysts, who will be devoted to middle-market PE, but said that the bank would be adding headcount in these positions as well. 

Having a dedicated team is a first for Goldman Sachs, Frieldand said. Previously, the firm’s bankers who cover PE firms handled both large firm clients and middle-market clients, but now it is hoping to cover more ground in the middle-market space by establishing a dedicated team. 

“Have we had senior people in our financial sponsor coverage group covering middle market sponsors? Yes,” said Friedland. “Have we had multiple people who are going to spend 100 percent of their time covering middle market sponsors? No.”

“This becomes their mission,” said Friedland. “You want people focused.” 

Building the team 

The team of five will be finalized on Dec. 9 when David Cohen Mintz officially joins Goldman from Rothschild after more than 15 years.

Cohen Mintz will join Scott Smith, a managing director from Piper Jaffray, as well as Bryan D’Alessandro, a managing director from BMO Capital Markets, both of whom joined Nov. 11. 

Jean Oh, who joined Goldman from Morgan Stanley in 2018, has since been appointed with middle-market PE coverage responsibilities. The fifth managing director, Esma Yildiz, will be based in Europe.

The five will serve as so-called relationship bankers within the broader Cross Markets team, which is expected to staff more than 100 bankers by year’s end, including 45 managing directors.

The team, led by Friedland and Will Bousquette in the Americas, and Rob Pulford in the EMEA, is comprised of both bankers who execute M&A deals and financing arrangements, as well as the industry specialists who support them by attending pitch meetings and offering sector-specific analysis and data.

Expanding market share in the middle market is a more entrepreneurial effort than Goldman’s large cap M&A business, because it means cultivating new relationships rather than relying on existing ones. 

David Kamo, a managing director overseeing M&A efforts in the Americas, told us that he is flying out to clients and sitting in on lengthy private equity deal diligence sessions, instead of sending the more junior bankers that more typically handle that work.

‘We have to prove ourselves every day’ 

The hands-on approach is a bid to win clients over from the smaller firms that have traditionally served them — where they may have longstanding relationships and expect a certain level of personal service. 

“I think there is an expectation on the other side of the table that, ‘They are Goldman Sachs and they expect to just win and have business handed to them,'” said Kamo, who has previously brought industry specialists with him to pitches in sectors like healthcare. “But we take nothing for granted. We know in this market we have to prove ourselves every day.”

Proving itself has also meant rolling out new services, like a proprietary website only accessible to Goldman’s PE clients where they can read curated news and information including deals, fireside chats with executives and industry reports.

“When you cover more companies and clients, leveraging technology to provide them information and insight is just a way to make incremental touches with people and enhance our brand,” said Friedland. 

But perhaps most importantly, it’s meant sharpening up Goldman’s pitch materials, stressing its global reach, telling clients it can do things boutique firms can’t — like underwriting debt — and pointing to its relationships with strategic buyers.

“There is a great chance that we have very good relationships and are in the board room and know them really well,” Kamo said, “whereas the dialogue with the boutiques, for strategic buyers, tend to be more episodic.”

Going into 2020, Goldman will be coming off not just a series of hires, but also the announcement of PE deals that it hopes to build upon and use to market its services to future companies.

This includes its advising on the 2019 sale of hotel operator Interstate Hotels & Resorts — a Kohlberg & Company portfolio company — to PE giant Advent International, followed up by the merger of Aimbridge Hospitality, another Kohlberg portfolio company and hotel management firm, into Interstate.

Friedland, the global head of M&A in Cross Markets Group, said hiring in 2020 will focus on the Midwest and West Coast whereas Goldman already has an East Coast team established. 

“It’s early days,” said Friedland. 

Source: Business Insider

Can’t stop reading? Read more