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Goldman Sachs Case Essay

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| Goldman Sachs Group Topic: Initial Public Offering Report Format I. Statement of the Problem II. Alternative Solutions III. Analysis of Alternative IV. Final Recommendations V. Appendix I. Statement of the Problem If the firm remains a partnership could the firm continue to compete on an equal footing with its competitors, would they be able to retain key employees? How would tangible as well as intangible assets be valued in its stock price as a public firm? Problem: What initial public offering valuation would be most appropriate for Goldman Sachs & Co. to use? II. Alternative Solutions 1. Industry Comparables 2. DCF model III. Analysis of Alternatives In order to compare Goldman Sachs to companies…show more content…
This can get to part of the cash flows that we are looking for to do the discounted cash flows model. It does not give other items that are needed such as the capital expenditure of Goldman Sachs and the Net Working Capital in order to find the change for the projected years to come. Another number we would need to find the IPO with this model would be a discount rate and some more information from the other companies that have gone public that Goldman Sachs can be compared to. This is why this model does not work well in order to find the IPO for Goldman Sachs. All of the numbers will be estimated amounts and not be able to properly give Goldman Sachs the IPO price. IV. Final Recommendations Goldman Sachs should use their industry comparables in this case to value their IPO. There is more given information for the other companies to come up with a better number for Goldman Sachs. The IPO that was found was $55.83 which would be a good number for Goldman Sachs to start off with. This IPO price is a good estimate given from the information in the Exhibit and what I feel they should use as their IPO. V. Appendix Comparables: Price/book average= (4.5+3.6+4.2+1.7+1.6)/5 Price/Earnings Average= (18.6+21.3+28.2+11.7+12.1)/5 Stock Price estimate= 3.12*15.64 =18.38*3.42 Average Stock Price=
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