M&A: Debating the Goldman standard
Other banks are unlikely to follow the US firm's example of advising on both sides of a takeover
| Spitzer: scrutinizing conflicts
Bank advisers rarely dominate coverage of a large M&A transaction as much as Goldman Sachs has by acting as financial adviser to both the New York Stock Exchange and Archipelago Holdings on their planned merger announced in April. A class action suit filed by NYSE seat-holder William Higgins attempting to block the takeover names Goldman Sachs as co-defendant, claiming the firm "manipulated the deal to its own advantage". Former NYSE director Kenneth Langone, who could still mount a rival bid, called Goldman's role "unseemly".
Attention has centred on Goldman's perceived conflict of interest in this deal because, even discounting the personal ties between Goldman and the two companies, it does have interests in both companies: a 15.5% stake in Archipelago and 1.5% of the seats on the NYSE. These features are unique to this case.
Has Goldman really moved into uncharted water simply by advising two companies on different sides of the same deal?
Richard Peterson, M&A analyst at data provider Thompson Financial in New York says that going back to the early 1980s, he can find around 100 M&A transactions where Goldman has worked on both sides of the deal, not including that where other banks have taken on a similar dual advisory role.