Goldman Sachs MD: "These people should have gone years ago"
As flagged in late May, Goldman Sachs is indeed trimming some managing directors. 125 of them are going, meaning they account for half the current round of 250 cuts.
One MD who left the firm earlier this year says the new round of MD-focused layoffs is unsurprising.
"The 4k cuts in January needed some MDs to help coordinate them," he tells us. "Now they're just cleaning up loose ends by taking out a bunch of MDs who should have gone in January but who were needed to help orchestrate the January cuts..."
The MD layoffs come ahead of a new round of managing director promotions at Goldman in November 2023. Given that each Goldman MD earns a salary alone of $400k, 125 cuts represents fixed cost savings of circa $50m. Goldman is thought to have 2,000 MDs in total; the cull represents just 6% of the MD class.
Many of those being dumped have simply been "treading water," says the recently ex-MD: "Some should have gone years ago, whilst others are just in the wrong division/location at the wrong time." In many cases, he says they haven't done "real hands-on work" for a decade and are expensive to keep around if they're not either conspicuously bringing in incremental revenue, or leading initiatives with "monetisable possibilities and enabling direct cost efficiencies."
He says the problem at Goldman, as elsewhere, is that projects proliferated during the good times. "Things make sense when there are zero interest rates and free money, but as a lot of companies and start-ups are finding, when the cost of doing business increases materially then these pet projects with no short/medium term cashflow/pnl possibilities become just overly expense vanity projects," he adds. "Some can can be justified to keep around for long-shots, or as good PR/marketing (aka. ESG et al.), but others are ended."
As MD numbers fall, he predicts it will become easier for Goldman to trim headcount further down the value chain. "It's not a stretch of the imagination to see total headcount continue to fall materially back to pre-COVID levels over the next 24 months."
It's not entirely clear who the unwanted 125 MDs are. Goldman isn't commenting on names. However, it is known that two European managing directors are leaving. Oliver Sedgwick, head of EMEA investment grade capital markets is voluntarily taking some time out to be with his family before looking for a new role; Angelo Diotisalvi, head of Southern European FIG financing solutions is also out. One headhunter said at least 20 MDs in the continent have been cut so far and it's not over yet.
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