Goldman Sachs

In 1869, Marcus Goldman walked into a leather goods shop. The owner needed cash, but had customers paying in 60 days. Goldman bought the invoice at $0.90 on the dollar and waited for payment. The owner got liquidity. Goldman earned 10%. Repeated hundreds of times, that spread generated steady profit with minimal overhead. The model was Simplicity. Buy cheap, sell dear. By the 1980s, Goldman evolved into investment banking. When companies sold shares publicly, Goldman underwrote offerings. Goldman bought shares at a negotiated price and resold them at 3% to 7% markup. On a $1 billion initial public offering, that generated $30 to $70 million in fees. The model stayed constant. Buy low, resell high, capture the spread. Advisory fees added another layer. When companies acquired each other, Goldman charged 1% to 2% of deal value. A $10 billion merger meant 100 to 200 million in fees. Goldman often advised both sides simultaneously.