Goldman/Facebook: Perceptions about Goldman Sachs have shaped the reality of its Facebook fundraising. The Wall Street firm is now excluding US investors from buying into the social network after media scrutiny made a private placement seem too public. Facebook invites attention - but Goldman does too these days. For all its focus on clients, the firm still has a blind spot about its own public image.
Getting hired by Facebook for a $1.5 billion private placement was a coup for Goldman. But in hindsight, bankers took a chance on their ability to keep a lid on things. With Facebook easily the hottest Internet property and carrying a putative valuation of $50 billion, it was always likely that reporters would unearth details. And that danger was surely multiplied by the association with Goldman.
The firm used to be the investment banker’s investment bank — highly influential, but operating mostly under the radar. That started to change at the time of its IPO a little more than a decade ago, and attention rocketed during the financial crisis as Goldman and its alumni faced negative headlines and often failed to explain themselves successfully.
That spawned conspiracy theories, mostly far-fetched. But the firm has become a regular media target. Goldman would have been on safe ground with Facebook had there been no leaks and even, probably, if the placement documents had reached the public domain in full. As it was, bitty and inaccurate revelations meant some potential investors might not be getting a full picture — and under US private placement rules, Goldman couldn’t pipe up to clarify. The decision not to sell the deal to US investors was probably the right response. This doesn’t mean Facebook made a mistake by hiring Goldman. It looks as if Mark Zuckerberg’s company will easily get all the investment dollars it wanted. But the episode suggests companies considering hiring Goldman — especially those hoping to do deals that break new ground or test existing rules — may need to weigh the firm’s profile as a potential risk factor. Goldman, meanwhile, needs to realise it’s no longer toiling away in the background. Recognising that may help it one day regain a measure of obscurity.