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Goldman Sachs Mulls Wealth Management Acquisition - Report

Tom Burroughes Group Editor 13 May 2019

Goldman Sachs Mulls Wealth Management Acquisition - Report

The US firm is close to agreeing a deal as it looks to widen its wealth management footprint and reduce reliance on choppy trading and underwriting revenue, the report said.

Goldman Sachs is reportedly close to agreeing to buy wealth-management firm United Capital Financial Partners, expanding its push into managing assets for individuals, according to the Wall Street Journal.

The business has developed its private wealth management business on a number of fronts and this publication understands that more expansion is on the cards. 

The US firm declined to comment to Family Wealth Report.

The WSJ cited sources saying that Goldman is set to pay several hundred million dollars for United Capital. The deal could be announced in days and will, if agreed, be the largest in almost two decades, coming seven months after chief executive David Solomon took up the post. (He succeeded Lloyd Blankfein.) The group also made other senior management changes last year.

The report said that the US firm wants to diversify its activity and manage more client money because this is a less volatile way of earning revenue than trading or handling investment banking business. In recent years, firms such as UBS have pared down investment banking to focus more on wealth management.

California-based United Capital manages $24 billion in client assets and has about 220 advisors. The report said that Goldman Sachs’ roster of about 450 private bankers manage $480 billion in assets, mostly for billionaires. 

The firm is planning to develop an online offering under its Marcus consumer-banking brand that is pitched at the mass affluent market - a radical shift in focus for Goldman Sachs.

In April, Goldman Sachs reported investment management net revenues of $1.6 billion in the first quarter of this year, a 12 per cent year-on-year decline, broadly matching the revenue drop for the US group as a whole. Group net revenue fell by 13 per cent, at $8.8 billion. Assets under supervision at the investment management arm stood at $1.599 trillion, a rise of 7 per cent from end-March 2018. 

If the acquisition does go ahead, it will fit with a broader trend of wealth management M&A in North America and further afield. Regulation, changing technology and rising client expectations are some of the factors driving business marriages.

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