March 24, 2023

  • Six of Goldman’s first-year healthcare investment banking analysts and five of their colleagues recently left the firm, the sources said.
  • A former colleague thought the group’s bonuses were 60% lower than last year’s incentive pay, adding to widespread disappointment and frustration.
  • The bank has been facing internal complaints about working conditions and sleepless nights.

Insider has learned that the healthcare team at Goldman Sachs’ New York City investment banking unit suffered a series of junior talent losses this month, with three current and former employees saying at least 11 employees and first-year analysts have lost money due to concerns about compensation and banking jobs. Cultural dissatisfaction and left the group.

At least six first-year analysts left this week after receiving year-end bonuses, according to two people with direct knowledge of the departures. On top of that, five other employees left the healthcare group throughout August, with one employee saying they left after receiving a lackluster bonus, adding to personal frustration and disappointment.

According to the former colleague, the group had about 60 employees and analysts on desks in New York City prior to the exit, meaning the loss of 11 junior bankers accounted for about six points of the New York healthcare team’s junior workforce one.

Current U.S. staff said keeping up with their future workload “certainly puts pressure on the team” as it represents a “significant portion” of the team.

The current U.S. banker and former partner said the brain drain could erode the ability of healthcare teams to execute current deals and pursue new business — a move considering the group is the second-ranked healthcare advisor among U.S. banks by net worth. Crucial consideration income.

What’s more, the departures are the latest in a string of departures from Goldman since the start of last year that have had a harsh effect on Goldman’s culture and internal working conditions.

Six first-year analysts handed in their notices on Wednesday and left the same day, a person close to the bank said. Two current U.S. employees with knowledge of the departures said they left the unit for other jobs and started work immediately after receiving their analysts’ year-end bonuses earlier this month.

Meanwhile, the five employees, who have left in recent weeks, were a major factor in their decision to slash their bonuses from last year’s record levels, and the former employee said he thinks bonus figures will drop by about 60% this year. Associates and Analysts.

“The consensus is that they are working hard and feeling underappreciated,” the current US staffer said.

All three current and former Goldman Sachs employees who spoke to Insider insisted on anonymity to freely discuss what they heard and saw because matters related to compensation and personnel are private and they were not authorized to discuss with reporters.

Goldman’s healthcare banking unit is a leader in the industry. Losing a large number of junior staff can be a burden for an investment bank of any size, as it means recruiters and HR staff have to double down to fill vacant positions, while senior bankers have to step in to take over to relax and fill. blank. Traditionally, VPs, partners and analysts are responsible for keeping executive leverage open to real-time trades, while their more senior counterparts, such as managing directors and group heads, are busy tracking new business or liaising with company boards.

Unexpected departure, disappointing salary

More senior healthcare bankers appeared surprised by the exits of analysts when they learned of their departures this week, according to the current U.S. staffer, who has spoken to a member of the departing analyst panel.

According to the person, the group of nascent bankers privately expressed dissatisfaction with the demanding job requirements, often staying up until 5 a.m. and annoyed by the team’s increasing demands.

What makes the sudden departures all the more remarkable is that the analysts who left were in their first year on the job.

Compared to the traditional two years, it is unusual for junior bankers to abruptly cut ties with the company after only one year in the bank, and then some are promoted to associate rank, and many others are filtered into the assets area of ​​the company. Position management, private equity and hedge funds.

Analysts who left the company this week did not respond promptly to Insider’s request for comment on Friday. Current U.S. employees with knowledge of the group’s thinking said most seemed to embrace the immediate start.

The annual schedule for analysts and first-year employees to receive bonuses appears to play a role in their decision to quit. In fact, unlike senior bankers, junior bankers tend to receive bonuses in August, while senior bankers receive bonuses at the beginning of the new year, and performance reviews tend to take place at the end of the year.

But this year, the lukewarm bonus has made employees annoyed and ready to leave, said the former employee who spoke to Insider. First-year employee bonuses in August ranged from the low end of $25,000 (a very low figure by investment banking norms) to as high as $75,000 for high-performing employees, the person said, compared with last year’s highest. The prize is $200,000. The best performers on the medical team.

But 2021 was the biggest M&A year in history, and since then deal volume has shrunk and investment banking revenue has plummeted across the industry. Goldman Sachs said in its most recent earnings report that IB revenue slumped more than 40%, and CFO Dennis Coleman warned it would take a more cautious approach to replenishing headcount lost to attrition and reduce “speed” recruitment.

The former employee said the total compensation ranged from $175,000 to $225,000, taking into account the first-year employee base salary of $150,000. The division’s senior banker explained to frustrated junior employees that the record fee pool in 2021 was an anomaly and that they shouldn’t be comparing this year’s bonuses to last year’s, but first-year employees didn’t buy it .

“People just feel that the company has gone backwards to not paying street wages,” the person said, referring to a long-standing industry theory that Goldman pays bankers less than some rivals.

Pressure mounts on a blockbuster banking sector

The vice president of communications to analysts on the team protested that analysts may have violated company policy requiring them to disclose their plans to leave the bank to Goldman before signing an offer with another employer. People near the bank.

What’s more, the vice president is said to have told analysts that she will include a similar note in regulatory filings that banks are required to fill out when any employee leaves.

The U.S. staffer said the VP apparently locked outgoing analysts out of their firm’s email accounts to prevent a possible excess of farewell emails from causing further uproar among the team.

The vice president did not immediately respond to a request for comment.

The former employees had not previously expressed dissatisfaction with the job, and recently took part in an all-inclusive ski trip hosted by a bank partner, according to people close to the bank.

From 2018 to 2022, Goldman’s healthcare advisory business brought in more than $3.6 billion in overall healthcare deals, according to Dealogic. That puts it behind JPMorgan Chase (net income of nearly $4.22 billion) and well ahead of rivals such as Morgan Stanley, Bank of America and Citi.

Goldman Sachs beat JPMorgan in U.S. healthcare M&A, generating nearly $1.6 billion in net income over the past four-and-a-half years, second only to elite boutique bank Centerview Partners.

The Goldman team has been raining recently, advising on five M&A deals announced in the past three months, including one that is handling Amazon’s blockbuster acquisition of primary care provider One Medical, according to people close to Goldman. As Insider exclusively reported last month, Goldman Sachs advised billionaire Jeff Bezos’ tech giant on its nearly $4 billion acquisition, with managing director Jim Sinclair co-leading execution of the deal on behalf of the healthcare team.

While global M&A deal volume has been falling due to concerns about a potential recession and rising interest rates, the first current Goldman Sachs employee to speak to Insider said the healthcare team has been doing due diligence on possible deals or finding deal opportunities for clients , even if they are not implemented. The introduction and exploration of new business also kept the company’s healthcare bankers busy, the person added.

But the former colleague said the loss of at least 11 bankers could affect the team’s ability to get the job done. The company’s senior healthcare bankers will likely “put down the gas” for a while to look for new opportunities, the person added.

Past complaints about Goldman’s culture

This isn’t the first time Goldman has defected from a junior role over concerns about working conditions.

The bank has been trying to fend off scrutiny and criticism since spring 2021, when two surveys of the firm’s investment banking analysts painted a harrowing picture of junior staff’s perceptions of harsh working conditions, 100-hour workweeks hours and contributed to despair at the height of the pandemic.

Last summer, 12 of 16 analysts in the investment bank’s San Francisco-based technology, media and telecom unit opted to leave before their two-year analyst program ended, Insider first reported at the time. The loss of junior talent has put pressure on the team’s ability to execute, forcing the department to turn down some deal opportunities, people with direct knowledge of the internal conversations told Insider.

Inside Goldman’s headquarters at 200 West Street in lower Manhattan, there is little sign that the pressure has led to a fundamental cultural improvement.A March 2022 survey by online forum Wall Street Oasis of nearly 500 people who identified themselves as investment banking analysts found that the firm’s junior bankers continued to Report Work long hours and see their physical and mental health deteriorate on the job.

Thirty-nine percent of respondents to the survey said they regularly worked more than 90 hours a week (down 4 percent from the previous year), and on average, participants reported that on a 10-point scale, their mental health began It was 8.5 before work, but has dropped to 4.1 at the time of the questionnaire.

In response to an investigation leaked last year, Goldman Sachs CEO David Solomon told employees in an internal voice memo in March 2021 that he heard their pleas for help — but worked harder on behalf of clients in difficult times The ground push would be an antidote.

“Over the next few months, at times we were more nervous than others,” he said in comments at the time. “But remember: if we all go the extra mile for our customers, even if we feel like we’ve reached the limit, that can really change our performance.”

Do you work at Goldman Sachs or do you have more details on the departure of the healthcare banker mentioned in this article? Contact this reporter to share your thoughts. Reed Alexander can be reached by email ralexander@insider.comor via SMS/Encrypted Application Signal (561) 247-5758.

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